Net ‘hot money’ hits $1.09B as of early Dec

Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Mon, 24 Dec 2018 16:13:32 +0000

Foreign portfolio investments hit a net inflow of $1.092 billion early in December, Bangko Sentral ng Pilipinas (BSP) data showed, rebounding from a net outflow posted a year earlier.

The central bank’s latest update on “hot money” — so called due to the ease by which the funds can be taken in and out of an economy — put year-to-date inflows at $15.102 billion against total outflows of $14.010 billion.

In the same period last year, foreign portfolio investments hit a net outflow of $433.48 million.

The last week of November saw a net inflow of $832.07 million while the first week of December added a net inflow of $166.09 million.

Earlier this year, debt watcher Moody’s Investors Service tagged the Philippines as one of the emerging market economies likely to face volatile portfolio flows in the near term.

“We expect portfolio flows to emerging market countries to remain volatile as monetary policy accommodation in advanced economies is gradually withdrawn,” Moody’s said in August.

Hot money is mostly invested in the stock market and does not necessarily create jobs, unlike foreign direct investments that are used to build factories and buy capital equipment.

Speculative funds invested in financial assets are a component of the Philippines’ balance of payments, which summarizes the country’s economic transactions with the rest of the world over a certain period.

The central bank expects this type of investment to post a net outflow of about $100 million this year, lower than the $205.03 million net outflow last year.

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