PH growth prospects prompt foreign portfolio investments recovery

By Bianca Cuaresma, BusinessMirror

Posted at May 16 2014 08:12 AM | Updated as of May 16 2014 04:12 PM

MANILA -- Foreign investors ignored the possible further withdrawal of monetary stimulus, and decided to focus on the country’s growth prospects and quarterly corporate earnings, resulting in a recovery in the foreign portfolio investments (FPI) in April, the Bangko Sentral ng Pilipinas said.

Latest data from the central bank showed that FPI, more popularly known as “hot” or “speculative” money, reversed to a net inflow of $323.75 million in April, after four consecutive months of slumping in the net-outflow territory.

April’s inflow, however, was still lower than its year-ago level, which twas at $1.13 billion.

The total flows for the first four months of the year, however, were still at a net outflow of $2.031 billion, a sharp contrast from the $2.1-billion net inflow in the first four months of 2013.

In the last four months, market players took their money out of the Philippines and poured it into advanced economies, following the United States’s decision to start tapering their stimulus.

“The net inflows arose from investor optimism about the economy’s growth and strong quarterly corporate results, ignoring the possibility of a further cut in the United States Federal Reserve’s quantitative easing program,” the central bank said in the statement.

In particular, total inflows during the period hit $1.871 billion, more than making up for the $1.5-billion total outflows during the month.

Of the total outflows, about 80 percent went to the United States. The United States, Singapore, the United Kingdom, Malaysia and Luxembourg, meanwhile, were the top five investor countries during the period—accounting for about 78.8 percent of the total inflows during the period. The bulk of the hot-money investments during the period went to companies listed in the Philippine Stock Exchange (PSE), mostly in holding firms, property companies, banks, telecommunications companies and utilities firms. The flows from the transactions in the PSE-listed securities yielded net inflows of $217 million.

The other 23.3 percent, meanwhile, went to peso government securities. These investments, likewise, yielded net inflows of $112 million.

Net outflows, meanwhile, were seen from peso time deposits of $5 million. The government’s expectation of the net inflows from FPI is set at $2.1 billion, although this is still subject to review for possible revision this month.