More hot money enters Philippines in August

MANILA, Philippines — Foreign portfolio investments yielded a net inflow for the second straight month as more speculative funds came into the Philippines than what flowed out in August, according to the Bangko Sentral ng Pilipinas.

Data released by the BSP showed that total foreign investments registered through authorized agent banks posted a net inflow of $533.95 million in August, more than three times higher than the $153.46 million net inflow registered in the same period last year.

However, it was nearly 62 percent lower than the $1.48 billion net inflow in July.

Foreign investments registered by the BSP through authorized agent banks are also known as hot money or speculative funds since these flow regularly between financial markets as investors attempt to ensure they get the highest short-term interest rates possible.

For August, gross inflows coming mainly from Singapore, the United States, the United Kingdom, Luxembourg and Malaysia stood at $1.37 billion in August, 4.9 percent lower than the $1.44 billion in the same month a year ago.

Data showed the majority of the inflows at 51.2 percent were invested in securities listed on the Philippine Stock Exchange, particularly in banks, transportation services, holding firms, property as well as food, beverage and tobacco.

The remaining 48.8 percent went to investments in peso government securities, the BSP said.

On the other hand, gross outflows of speculative funds declined by 35 percent to $836.8 million in August from $1.3 billion in the same month last year. The US is still the top destination of outflows, receiving 52 percent of total outward remittances.

Year-to-date, the Philippines managed to book a net inflow amounting to $1.99 billion, significantly higher than the $310.8 million net inflow recorded in the same period last year.

For the eight-month period, gross inflows jumped by 31 percent to $11 billion compared to $8.4 billion in the same period last year, while gross outflows of speculative funds went up by 11 percent to $9.01 billion from $8.09 billion.

Last year, the Philippines missed its net inflow target of $1 billion as the net outflow of speculative funds amounted to $248.84 million. This was also a reversal from the $886.7 million net inflow in 2022.

The central bank expects foreign portfolio investments bouncing back strongly with a net inflow of $4.2 billion for 2024 and $2.9 billion for 2025.