Foreign Investment Strong in the Philippines despite Headwinds

Strong foreign investment has continued for the third straight month with the release of figured by the Bangko Sentral ng Pilipinas (BSP) last week.

Despite global trends pointing towards a great outflow of funds back to the US following the Federal Reserve’s easing of emergency measures, “hot money” in stocks, bonds and other money market instruments posted net inflows of $44 million from net outflows of $85 million in June 2013.

The latest data reflects the risk on stance of portfolio managers in the first half of the year, Bank of the Philippine Islands economist Nicholas Mapa told GMA News Online.

“Last year, we were in the midst of taper tantrum after then Federal Reserve chairman Ben Bernanke announced in May 2013 the central bank will start tapering its asset purchases,” he said. This led to massive sell-offs in emerging markets, such as the Philippines.

“This year is a different story as most are adopting a risk-on sentiment as the Fed delays the hike of its interest rates – enough impetus for fund managers to chase yields in emerging markets,” Mapa said.

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