Net 'hot money' shrinks to $212M in Feb. — Bangko Sentral

Net foreign portfolio investments dropped to $212 million in February from $1.3 billion in January,  reflecting profit-taking and correction in the stock market, the Bangko Sentral ng Pilipinas reported Friday. “Registered investments for the month of February amounted to $2.1 billion, down from $2. 8 billion in January, the central bank noted in a statement, saying it was “due to market correction and profit-taking amidst encouraging news on corporate earnings. “Outflows for the month rose to $1.9 billion from $1.5 billion in January,” the Bangko Sentral added. More than $1.6 billion of foreign portfolio investments—also called hot money—equivalent to 76.4 percent were invested in securities listed on the Philippine Stock Exchange as of end-February. Foreign investors also placed $500 million or 23.6 percent in peso-denominated government securities, the central bank noted. Hot money largely came from the United States, United Kingdom, Hong Kong, Singapore, and Luxemburg, according to Bangko Sentral, noting that the US “... continued to be the main beneficiary of outflows from investments receiving $1.5 billion.” Portfolio investments by foreign investors are also labeled as hot money as the funds may be easily withdrawn practically any time. According to Investopedia, it is “money that flows regularly between financial markets as investors attempt to ensure they get the highest short-term interest rates possible. “Hot money will flow from low interest rate yielding countries into higher interest rates countries by investors looking to make the highest return. These financial transfers could affect the exchange rate if the sum is high enough and can therefore impact the balance of payments,” Investopedia added. — VS, GMA News