More hot money enters Philippines

By Luz Wendy T. Noble, Reporter 

More foreign portfolio investments entered the Philippines than they left in November, amid improving economic conditions that boosted investor sentiment, according to the central bank. 

So-called hot money posted a net inflow of $109.56 million last month, 52% lower than a year earlier, based on Bangko Sentral ng Pilipinas (BSP) data released on Friday. But it was a turnaround from two straight months of net outflow. 

A relatively better investment climate amid a coronavirus pandemic had spurred the net inflows last month, said John Paolo R. Rivera, an economist at the Asian Institute of Management. 

“November was in a better position for business compared with other months, but threats to the investment climate remains given new coronavirus variants,” he said in a Viber message. 

Businesses were allowed to increase operating capacity in November after lockdowns were eased a month earlier as coronavirus infections fell. 

But investors were worried about the emergence of the highly mutated Omicron coronavirus variant first detected in South Africa. 

Foreign portfolio investments in the 11 months to November yielded a net outflow of $570 million, 85% smaller than the net outflow posted a year earlier. 

In November, inflows dropped by 18% to $1.284 billion from a year earlier, while outflows fell by 12.3% to $1.174 billion. 

The top five investor economies were the United Kingdom, United States, Luxembourg, Hong Kong and Singapore, accounting almost three-quarters of the investments, the BSP said. 

Short-term hot money mainly went to securities (93.1%) of holding firms, information technology, food, beverage and tobacco, banks and property. The remaining 5.9% was invested in government securities. 

Mr. Rivera said the recent uptick in coronavirus infections could again dissuade investors. “Given the recent developments in surge and protocol violations, an impending imposition of higher alert levels that could put the economy at risk could reduce investor confidence.” 

Health officials have cited increasing infections in Metro Manila. 

Earlier this month, the central bank lowered its hot money projection for the year to a net inflow of $1.5 billion from $4.3 billion given in September.