‘Hot money’ reverts to $2.1 billion net inflow in 2024

MANILA, Philippines — A total of $2.1 billion worth of speculative funds entered the Philippines last year, reversing the $247.3 million net outflow recorded in 2023, the Bangko Sentral ng Pilipinas (BSP) said.

Data from the central bank showed that the gross inflow of foreign portfolio investments registered with the central bank through authorized agent banks jumped by 39.2 percent to $17.93 billion, from $12.89 billion a year earlier.

More than half or 54.2 percent of the total inflow went to peso-denominated government securities.

The remaining 42.7 percent were invested in securities listed on the Philippine Stock Exchange (PSE) particularly banks, holding firms, property, transportation services and food, beverage and tobacco.

“On a per instrument level, transactions in PSE-listed shares resulted in net outflows of $897.53 million, smaller compared to the $1.02 billion net outflows in 2023, while those for peso GS recorded net inflows of $3 billion, higher by 284.2 percent compared to the previous year’s $781.08 million net inflows,” the BSP said.

About 83.5 percent of the total inflow last year came from the UK, Singapore, US, Luxembourg and Hong Kong.

Foreign portfolio investments are also known as hot money or speculative funds, as these flow regularly between financial markets as investors attempt to ensure they get the highest short-term interest rates possible.

On the other hand, gross outflows of hot money went up by 14.6 percent to $15.83 billion in 2024 from $13.14 billion in 2023.

“A majority or 96 percent of these outflows represented capital repatriation while the remaining four percent pertained to remittance of earnings,” the BSP said.

The US, the central bank said, remained the top destination of outflows as it accounted for 49.8 percent of the total amount pulled out from the Philippines.

For December alone, the Philippines booked a net outflow of $487.37 million, reversing the net inflow of $96.59 million in November 2024.

The gross inflow of speculative funds fell by 43.3 percent to $1.06 billion from $1.86 billion. During the month, about 51.7 percent of registered investments were in peso government securities.

About 48.3 percent were in PSE-listed securities, most of which were in banks, property, transportation services, holding firms and food, beverage and tobacco.

Investments in December mostly came from the UK, the US, Singapore, Germany and Ireland with a combined share of 76.3 percent.

On the other hand, gross outflow went down by 12.6 percent to $1.54 billion from $1.76 billion a month ago, of which 46.6 percent went to the US.