Hot money trickles back to Ph

Potentially higher return on investments in places like the US and elsewhere help convince fund managers to sell their peso-denominated placements in Philippine debt and equities for US dollars

Some of the foreign funds that abandoned the Philippines in May and June this year have found their way back to the country in recent weeks.

According to data from the Bangko Sentral ng Pilipinas (BSP), so-called portfolio funds, also known as “hot” or speculative money, flowed inward on net basis from January up to the second week of August.

Over the course of 28 weeks, hot money invested in the local stock market and in the local currency bonds and notes of private as well as government entities, showed net inflows aggregating $569.73 million.

This reversed the year-ago portfolio outflows totaling $152.7 million.

The BSP said gross potfolio inflows aggregated $10.105 billion over the course of 28 weeks and that only $9.535 decided to leave the Philippines to find greater rewards and fewer risks in debt and equities issues elsewhere.

This resulted to net hot money inflows of $569.73 million during the period when central banks around the world looked to respond in accordance with whether or not the US monetary policy would in fact hike its policy interest rate structure.

Minutes from the most recent Federal Open Market Committee meeting showed members rather confident that US growth should persist or stay within target in the months to come. This would then allow the US Fed to adopt an interest rate hike as the markets have anticipated.

In 2017, gross portfolio inflows totaled $10.219 billion against gross outflows of $10.372 billion. As a result, porfolio funds flowed out during the period on net basis totaling $152.75 million.

Gross potfolio inflows aggregated $10.105 billion over the course of 28 weeks and that only $9.535 decided to leave the Philippines to find greater rewards.

Potentially higher return on investments in places like the US and elsewhere help convince fund managers to sell their peso-denominated placements in Philippine debt and equities for US dollars.

That the peso weakened during this period proved an added incentive for the fund managers to ship their portfolios overseas instead.

It did not help that headline inflation, which corrodes earnings, pushed past the target ceiling of only 4 percent and actually averaged 5.7 percent in July.