MANILA, Philippines - Foreign portfolio investments recorded the year’s highest net inflow so far in July, but year-to-date figures are still down roughly 28 percent, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Also called “hot money,” – for the ease they enter and exit economies – portfolio investments recorded a net inflow of $1.056 billion as of July 27, the highest monthly inflow for 2012 and marked the first month inflows reached the billion-dollar mark this year.
Gross inflows amounted to $2.077 billion, while gross outflows reached $1.020 billion, figures showed.
The inflow last month was also a rebound from the net outflow recorded in June. A net inflow means more portfolio investments, usually placed in bonds and equities, entered the country.
Despite this, data showed year-to-date net inflow still fell 27.7 percent to $1.927 billion from the previous year’s $2.666 billion.
Analysts said persistent woes from the euro zone debt crisis continued to take their toll the financial markets as investors move away from risky assets in emerging markets like the Philippines.
BSP last month revised its 2012 outlook for hot money net inflows to $4.5 billion from $5.7 billion due to continued risks posed by the euro zone crisis. Portfolio inflows totaled $4.077 billion last year.
Hot money forms part of the country’s balance of payments (BOP), which recorded an annual 74 percent drop in surplus last month to $1.316 billion.
BOP summarizes a nation’s transactions with the rest of the world. It measures the capacity of a country to settle its debts and meet external trade obligations
A surplus means there were more capital inflows than outflows during a particular period. It also shows that the Philippines has more resources to meet future external requirements. - By Prinz P. Magtulis