Hot money posts net inflow of $97.92-M in January

Foreign portfolio investment (FPI) posted a net inflow of $97.92 million in January, as overall sentiment improved due to the swearing in of the new US government, the Bangko Sentral ng Pilipinas said.

In January, the net inflow in FPI, otherwise known as hot money because such funds are deemed less permanent than direct investment and are prone to fleeing at short notice, reversed the year-earlier net outflow of $486.1 million, the BSP said Friday. It also represented a turnaround from the $1.607 billion net outflow posted in December.

Overall inflows in January fell 23% year-on-year to $951.61 million and were down 12% from a month earlier.

Overal outflows declined more sharply, falling 102% year-on-year and 88% from December.

The central bank said possible catalysts to investor sentiment include the oathtaking of Joseph R. Biden as the 46th US president.

Top FPI sources in January were the UK, Singapore, the US, Luxembourg and Hong Kong.

Some 62.1% of FPI went into securities, mainly in banks, holding firms, property companies, food, beverage and tobacco companies, and transportation services firms.

In 2020, the financial system lost a net $4.24 billion in hot money in a rush to safe havens during the pandemic. The central bank expects FPI to post a net inflow of $3.5 billion this year as the global economy recovers.

Market optimism was fueled recently by the lower daily infections and vaccine rollouts in developed markets such as the US and parts of Europe, according to ING Bank-NV Manila Senior Economist Nicholas Antonio T. Mapa.

More than 66 million vaccine doses have been administered in the US, according to National Public Radio.

Vacine deliveries to the Philippines continue to lag, with the Palace announcing the arrival of the first batch of vaccines from China on Sunday. The Philippines became the last country in ASEAN without vaccines after 117,000 doses of the AstraZeneca vaccine landed in Vietnam on Feb. 25.

“These (factors) lower the attractiveness of emerging markets like the Philippines as an investment destination for portfolio investment, and we’ve already seen the reversal in direction for trading in February,” he said in an email.

The peso has been depreciating due to the continued pickup in global oil prices as well as some demand recovery.

Meanwhile, the Philippine Stock Exchange index (PSEi) has revisited the 6,000-point level after trading above 7,000 in January. The bellwether PSEi closed at 6,794.86 on Friday, up 0.58%. — Luz Wendy T. Noble

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