Foreign portfolio investments or ‘hot money’ posted a net inflow of $206 million in July, an improvement from the $72-million net inflow in June, as investors kept their exposure in the local stock market.
The July net inflow, however, was lower than $1.066-billion net inflow registered in the same month last year.
Foreign portfolio investments are overseas funds that are temporarily invested in local stocks, government securities and money market. These funds are also called ‘hot money’ because of the ease they are invested in and taken out of the local markets.
Total inflows in July declined to $1.434 billion from $2.269 billion a year ago, while gross outflows slightly rose to $1.227 billion from $1.202 billion.
This brought portfolio investments in the first seven months to a net outflow of $204 million, compared to a net inflow of $1.743 billion in the first seven months of 2016.
Bangko Sentral said the hot money recovered in July because of slower inflation, strong net foreign buying, investor reaction to President Rodrigo Duterte’s second State-of-the-Nation Address and the US Federal Reserve’s decision to keep interest rates unchanged.
About 90.5 percent of the registered investments in July were in securities listed in the stock market, pertaining to food, beverage and tobacco companies; holding firms; banks; property companies; and utility companies. The 9.5-percent balance went to peso government securities.
The US, Singapore, the United Kingdom, Luxembourg and Switzerland were the top five investor countries in July.
Portfolio investments posted a net inflow of $404 million in 2016, surpassing the $1.1-billion net outflow target set by Bangko Sentral ng Pilipinas for the year.
Bangko Sentral expects hot money to post a net outflow of $900 million this year.