Net hot money inflow up 8% to $4.225 B in 2013

By Kathleen A. Martin, The Philippine Star

Posted at Jan 17 2014 08:22 AM | Updated as of Jan 17 2014 04:22 PM

MANILA - The net inflow of foreign portfolio investments, also known as hot money, surged eight percent in 2013, exceeding the central bank’s projection on the back of the country’s sound macroeconomic fundamentals.

Bangko Sentral ng Pilipinas data showed net hot money inflow went up to $4.225 billion last year from $3.911 billion in 2012. It was also way above the revised $3.2 billion assumption of the central bank for 2013.

Foreign portfolio investments are also called hot money given the ease with which the funds enter and exit economies.

The BSP attributed the increase in hot money inflow to the country’s sound macroeconomic fundamentals; sustained high growth in the first three quarters; (and) the investment grade ratings given to the Philippines.

The central bank also said crisis in developing countries such as the United States and those in the euro zone also caused funds to be diverted to emerging economies such as the Philippines.

Gross inflows jumped 54 percent to $28.404 billion in 2013 from $18.483 billion in 2012, while gross outflows climbed 66 percent to $24.180 billion from $14.571 billion.

Last year’s gross inflows were the highest recorded since 1999, surpassing the previous record high of $18.5 billion in 2012.

“There was a steady stream of investment inflows of more than $2 billion a month except in the ghost month of August, believed to be unlucky for business, and in December due to the announcement of the forthcoming tapering of the United States quantitative easing program,” the BSP said.

The bulk or 74.7 percent of hot money inflows went to Philippine Stock Exchange-listed securities, while another 23 percent went to peso-denominated government securities.

The top investor countries last year were the United Kingdom, the United States, Singapore, Luxembourg, and Hong Kong.