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BSP: $531M net 'hot money' exited Philippines in February

Short-term foreign investments or “hot money” registered with the Bangko Sentral ng Pilipinas ) through authorized agent banks reversed to a net outflow in February.

Data released by the BSP showed that transactions on foreign portfolio investments posted net outflows of $531 million, a turnaround from $292 million net inflow in January.

The net “hot money” outflow resulted from the $1.2 billion in gross outflows against $680 million in gross inflows for the month. 

Foreign portfolio investments are also called hot money because of the ease by which the funds enter and leave markets.

The $680 million gross inflows of investments for the month are lower by 32.3% compared to the $1.0 billion recorded in January.

The majority of these investments or 79.6% registered were in Philippine Stock Exchange-listed securities.

These were mainly in banks, holding firms, property, food, beverage and tobacco and electricity, energy, power and water.

The remaining went to investments in peso government securities (20.4%) and in other instruments (less than 1%). 

The top five investor countries for the month were the United Kingdom, United States, Luxembourg, Hong Kong, and Singapore with combined share to total at 82.5%, the BSP said.

The $1.2 billion gross outflows for the month, meanwhile, were higher by 70.2% than the gross outflows recorded for January at $712 million.

The US received 67.3% of total outward remittances.

Year-to-date transactions for foreign investments registered with the BSP, through AABs yielded net outflows of $239 million, a turnaround from the $289 million net inflows noted for the same period last year.

“Registration of inward foreign investments delegated to AABs by the BSP is optional under the rules on foreign exchange (FX) transactions,” the central bank said.

“It is required only if the investor or its representative will purchase FX from AABs and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment.  Without such registration, the foreign investor can still repatriate capital and remit earnings on its investment but the FX will have to be sourced outside the banking system,” it said. —LBG, GMA Integrated News