MORE ‘HOT MONEY’ LEAVES IN NOV. – More foreign portfolio investments left the country last month, as gloomy economic outlook on markets hard hit by the global financial crisis dampened investor sentiment (Philippines)

Posted by Gilmour Poincaree on December 11, 2008

Friday, December 12, 2008 – Vol. XXII, No. 100

by G. S. dela Peña


Data released yesterday by the Bangko Sentral ng Pilipinas (BSP) showed that foreign portfolio investments — referred to as “hot money” due to the ease by which they are transfered — posted a net outflow of $399 million for November alone, higher than the $389.8-million net outflow the preceding month.

The November figures were a reversal from the net inflows of $51.2 million in the same month last year.

The 11 months to November saw net outflows totaling $1.3 billion, a sharp contrast to the $3.7-billion net inflows recorded in the same period last year.

“Investors continued to be driven primarily by concerns over the weakening of major economies, particularly that of the US, despite temporary optimism over the results of the presidential elections there,” BSP Governor Amando M. Tetangco, Jr. said in a statement.

On a gross basis, hot money investments totaled $399.5 million, 68% of which were placed in listed shares, 30% in Treasury bonds, and 2% in money market instruments and peso bank deposits.

But capital repatriations reached $798.5 million in November, with outflows traced to withdrawals of investments from listed shares ($88 million or 11%), government securities ($135.4 million or 17%), money market instruments ($3.6 million or less than 1%), and bank deposits ($571.5 million or 72%).

From January to November, investment in listed shares posted a net inflow of $2.1 billion, while placements in peso-denominated government securities, money market instruments and peso bank deposits showed net out-flows of $110.8 million, $300,000, and $3.3 billion, respectively.

Gross investment inflows totaled $8 billion, a 46% contraction from the $14.7 billion recorded in the same period last year.

But outflows were higher than inflows at $9.3 billion, although 15% less than last year’s $10.9 billion. Of this amount, 37% were attributed to investments in listed shares, 22% to funds placed in government securities, while money placed in money market instruments and bank deposits accounted for 41%.

The United Kingdom, Singapore and the US remained the top three investor countries, accounting for 70%.



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