Hot money reverts to inflow in Philippines
19 March 2016, Nirapad News: The Bangko Sentral ng Pilipinas (BSP) yesterday reported foreign portfolio investments swung to a net inflow of $57.74 million in February from three succeeding months of net outflow.
A net inflow indicates more investments entered the country than left. Portfolio flows or hot money are usually channeled to the financial markets.
Bulk of inflows or 77.1 percent entered PSE-listed firms, while 22.9 percent went to the peso bond market, the central bank said.
The inflow appeared to indicate that investors have not punished the country so far as a result of the $81-million money laundering case involving the cross-border transfer of funds from Bangladesh to the Philippines, reports The Philippine Star.
“If you look at the behavior of financial markets over the last several years, there has been no indication there is a negative impact,” Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. told reporters yesterday. “But we have to recognize there is a risk associated with this and, therefore we need to address that,” he added. Regulators are scrambling to trace and retrieve stolen funds from the Bangladesh Bank, the Southeast Asian nation’s central bank, after they found their way to three local casinos last month.
Tetangco said the probe by the Anti-Money Laundering Council (AMLC), which he chairs, is still ongoing, but vowed to pursue “appropriate action” against those who are found liable. “We have to show there is action that’s being taken with respect to this particular case and with respect to further strengthening the legal framework…,” he said.
Jun Calaycay, analyst at Accord Capital Equities Corp. agreed with Tetangco, saying financial markets may react once probe results are released.
“What investors are necessarily looking for is if someone will get punished as a result of this case. Remember, this is not a simple case, this includes another jurisdiction,” Calaycay said in a phone interview. So far though, Calaycay said, companies dragged in the case have “even posted gains” so far this year.
The Rizal Commercial Banking Corp., where the laundered funds allegedly passed through, opened at P30.25 apiece yesterday, unchanged from its close last Thursday.
Meanwhile, the benchmark Philippine Stock Exchange index (PSEi) was up 3.72 percent as of Thursday after it closed 7,210.90 from its Dec. 29, 2015 closing. It was trading at 7,303.54, up 1.29 percent as of 2:34 p.m. yesterday. The PSEi closes at 3:30 p.m. “This is a litmus test for us in terms on the implementation of our laws. Investors would want to see how we go about it,” Calaycay said.
For his part, Nicholas Antonio Mapa, research officer at Bank of the Philippine Islands, said any impact on financial markets would be felt in the bourse than in the foreign exchange market.
As of last Thursday, the peso has appreciated against the dollar by 1.72 percent as of yesterday’s 46.25 opening. It closed at 47.06 last Dec. 29, 2015. Foreign exchange transaction closes at 4:30 p.m. “It would be more in the stock market. But so far, we have not seen any major impact yet. The financial markets continue to be stable,” Mapa said in a separate phone interview.