$7.69-M net hot money outflow recorded in June

by Prinz P. Magtulis, The Philippine Star

Posted at Jul 14 2012 08:26 AM | Updated as of Jul 16 2012 04:28 PM

MANILA, Philippines - Foreign portfolio investments – also called “hot money” for the ease with which they enter and exit economies – posted a net outflow last month as uncertainties in Europe resulted into risk aversion, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Hot money – placed in investments such as bonds and stocks – registered a net outflow of $7.69 million in June, reversing the $353.79 million net inflow recorded in the same period last year.

“Registered investments declined by 20.3 percent from the previous month’s $1.5 billion as uncertainties about the eurozone affected global markets and induced heavy sell-offs,” the BSP said.

This was the second net outflow for the year, following February’s $305.30 million.

Last month’s negative result trimmed the year-to-date net inflow to $871 million compared with the $2.393 billion net inflow a year ago. Gross inflows amounted to $8.247 billion, while gross outflows reached $7.376 billion.

Most hot money went to listed shares at the Philippine Stock Exchange (PSE), BSP said.

“The main beneficiaries of investments in PSE-listed shares were: holding firms ($311 million); food, beverage and tobacco manufacturers ($213 million); telecommunication companies ($152 million); banks ($145 million); and property firms ($103 million),” the statement said.

Most inflows came from the United Kingdom, the United States, Hong Kong, Singapore and Luxembourg. The US continued to be the main destination for outflows, it added.

BSP last month revised its 2012 outlook for hot money net inflows to $4.5 billion from $5.7 billion due to continued risks posed by the eurozone crisis. Such inflows totaled $4.077 billion last year.

Hot money forms part of the country’s balance of payments, which measures our capacity to settle obligations and meet external requirements.