Hot money sets Philippine record

Foreign portfolio investments (FPI) into the Philippines surpassed the 2007 record, hitting a new high last year, according to the central bank.

In a statement, Bangko Sentral ng Pilipinas (BSP) Gov. Amando Tetangco Jr. said FPI or "hot money" yielded a net inflow of $4.6 billion in 2010 compared with $388 million the year before.

The previous record happened in 2007 when net inflows hit $3.5 billion.

Gross inflows aggregated $13 billion last year, more than double the $6.3 billion in 2009.

Tetangco attributed the strong inflows to the initial public offerings of Cebu Air Inc. and Nickel Asia Corp., as well as the strong interest in government securities that brought investments of $4 billion.

"The bullish stock market performance in 2010 resulted from positive investor sentiment with the assumption of a new administration and strong macroeconomic fundamentals on the domestic front, inspiring greater confidence in the country vis-?-vis sovereign debt concerns in the euro zone, the benign economic outlook for the United States and China, and the effects of the geopolitical risks within the Korean peninsula," the BSP chief said.

Investments in Philippine Stocks Exchange-listed shares reached $8.5 billion, or 74.9 percent higher than $4.8 billion in 2009.

Major beneficiaries were banks at $1.7 billion; property companies, $1.6 billion; holding firms, $1.5 billion; telecommunication companies, $1.3 billion; and utilities, $930 million.

The balance of registered investments went into government securities, $4 billion of which in peso time deposits and $503 million in money market instruments.

Registration of FPI with the BSP is voluntary and entitles the non-resident investor or their representative to buy foreign exchange from authorized agent banks and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of related earnings.

The US, Singapore, UK, Luxembourg and Hong Kong were the top five investor countries, contributing 81.7 percent to total inflows.

Outflows amounted to $8.4 billion and were mostly withdrawals from interim peso deposits, accounting for 93.3 percent of total.