MORE short-term foreign investments entered the country in August as the economy showed early signs of recovery, although the net inflow was the smallest since 2008.
Foreign portfolio investments (FPI) — also dubbed as “hot money” due to the ease by which these funds enter or leave an economy — yielded a net inflow of $11.51 million in August, based on data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday.
This is a turnaround from the net outflow worth P126.76 million seen in the same month a year earlier as well as the net P339.7 million that left the country in July. However, this was the smallest net inflow since the $7.38 million logged in July 2008, which was during the Global Financial Crisis.
Hot money yielded a net outflow of $434 million in the first eight months of 2021, smaller than the net $3.9 billion that left the economy in the same period of 2020.
The central bank said key developments in August include the release of data showing the country exited recession in the second quarter, as well as improved corporate earnings in the same period.
Gross domestic product (GDP) rose 11.8% year on year in the April-June period following five quarters of contraction.
Meanwhile, a two-week lockdown was imposed in August to curb the Delta-induced infection surge, the BSP noted, which caused the country’s economic managers to cut the growth target for this year to 4-5% from 6-7% previously.
Continued vaccine arrivals and the improvement in the country’s inoculation rate helped improve investor sentiment in August, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.
Central bank data showed hot money inflows in August increased 21% to $806.99 million from $666.51 million a year earlier. It likewise rose by 10.6% from the $729.77 million in July.
On the other hand, portfolio outflows slipped 0.27% to $795.48 million in August from $793.27 million in the same month of 2020. It also decreased by 25% from the $1.069 billion logged in July.
The BSP identified the United Kingdom, United States, Singapore, Norway and Luxembourg as the top five investor countries for the month with combined share of 79.3% of the total.
The bulk or 64.7% percent of the foreign portfolio investments went to securities listed on the Philippine Stock Exchange, including food, beverage and tobacco companies, property firms, holding companies, banks, and transportation services. Meanwhile, more than a third (35.3%) went to investments in peso-denominated government securities.
The central bank in September said it expects hot money to yield a net inflow of $4.3 billion this year, downwardly revised from the $5.5-billion net inflow projected earlier.
Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said the gradual easing of restriction measures will help bring in more investments into the country.
“This is expected to continue and attract portfolio investors because of the expected change in the national leadership,” Mr. Lopez said in a Viber message. — Luz Wendy T. Noble