‘Investor optimism’ makes hot money rebound in Feb.

SANTIAGO J. ARNAIZFOREIGN portfolio investments — referred to also as “hot money” for the ease by which these funds enter and leave the economy at the slightest stimulus — turned around in February from a year ago on the back of sustained “investor optimism” even as they were more than halved from January, according to latest data which the Bangko Sentral ng Pilipinas (BSP) released on Thursday.
February bared $339.57 million in net hot money inflows that reflected a rebound from the year-ago $528.53-million net outflow but were still 55% less than January’s $762.82-million net inflows.
Gross inflows increased by 34.9% to $1.41 billion in February from $1.045 billion a year ago but were still 31.6% less than January’s $2.062 billion.
In comparison, gross outflows fell by 32% to $1.071 billion in February from $1.574 billion a year ago, and by 17.6% from January’s $1.299 billion.
About 77.4% of investments registered with the BSP in February went to securities listed on the Philippine Stock Exchange (PSE) — particularly to banks, holding firms, property companies, food, beverage and tobacco companies, and transportation companies — while 22.4% went to peso-denominated government securities and just 0.2% went to other peso-denominated debt instruments.
All these transactions yielded net inflows in February, BSP said, with those involving PSE-listed securities at $175 million, those of peso-denominated government securities at $162 million and those of other peso-denominated debt instruments at $3 million.
February saw the United Kingdom, the United States, Singapore, Luxembourg, and Norway were the top five hot money sources, accounting for 67%.
The central bank attributed that month’s net inflows “to investor optimism arising from developments on trade negotiations between the US and China and the passage of the tariffication law, which is expected to help boost the rice supply in the country and thereby temper inflation.”
President Donald Trump that month postponed “indefinitely” the US plan to impose $200 million in tariffs on Chinese goods, originally scheduled on March 1, citing “substantial progress” in bilateral talks.
Meanwhile, President Rodrigo R. Duterte signed on Feb. 14 the law liberalizing importation of rice by replacing quantitative restrictions on imports of the grain with tariffs: five percent for rice coming from within the Association of Southeast Asian Nations (ASEAN); 40% for imports within the 350,000 metric-ton minimum access volume (MAV), regardless of country; and 180% for above-MAV imports from non-ASEAN countries.
The latest flows brought the tally to a $1.102.39-billion net inflow in the first two months, a turnaround from a $366.37-million net outflow a year ago.
Sought for comment, Rizal Commercial Banking Corp. economist Michael L. Ricafort credited easing inflation and low interest rates for sustained investor interest.
“Lower inflation and interest rates fundamentally increase the incomes and purchasing power of consumers… and also increases the sales, profits and valuation of listed companies as well,” Mr. Ricafort explained in a mobile phone message.
Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said separately that foreign portfolio investments could post smaller net inflows in March “unless external environment gets better for good,” particularly significant gains in resolving the Sino-US trade spat.
This month’s first two days saw net inflows slashed significantly to just $49.13 million from $1.178 million a year ago, as gross inflows fell to $118.56 million from $1.329 billion and total outflows dropped to $69.43 million from $150.37 million. — Karl Angelo N. Vidal