BSP: $689M net 'hot money' entered Philippines in February

Short-term foreign portfolio investments or “hot money” stood at a net inflow in February, data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed.

Foreign portfolio investments registered with the BSP are also called hot money due to the ease by which the funds enter and exit the markets.

These are mainly investments in Philippine Stock Exchange-listed securities, peso-denominated government securities, peso time deposits with banks with minimum tenor of 90 days, other peso debt instruments, unit investment trust funds, and other instruments such as Exchange Traded Funds and Philippine Depositary Receipts.

BSP data showed foreign investments registered with the central bank yielded net inflows of $689 million in February, a turnaround from $76-million net outflows recorded in January.

The net hot money inflows last month resulted from gross inflows of 1.5 billion and gross outflows of $859 million.

The $1.5-billion gross inflows of investments in February was higher by 25.3% than the $1.2-billion inflows seen in January/

Bulk or 61.4% of registered investment were in Peso Government Securities at $951 million, while the remaining 38.6% were channeled through Philippine Stock Exchange-listed securities amounting to $598 million.

Most of the investments in PSE-listed securities were poured in banks; transportation services; (holding firms; property; and food, beverage and tobacco.

“Investments for the month mostly came from the United Kingdom, Singapore, United States (US), Luxembourg, and Hongkong with a combined share of 89.1%,” the BSP said.

Meanwhile, $859 million worth of capital exited the country in February, albeit lower by 34.5% than the $1.3 billion gross hot money outflows seen in January.

“The US remains to be the top destination of outflows, receiving $485 million (or 56.4%) of total outward remittances,” the central bank said.

Year-on-year, registered investments in February are higher than the $680-million recorded in February last year, while gross outflows decreased by $370 million from $1.2-billion gross outflows recorded in the same month last year.

Moreover, the $689-million net hot money inflows in February were a reversal from the net outflows of $549 million seen in the same period in 2023.

Year-to-date foreign portfolio investments transactions registered with the BSP yielded net inflows of $613 million, a turnaround compared to the $258 million net outflows recorded in January to February 2023. — RSJ, GMA Integrated News