The Bangko Sentral ng Pilipinas (BSP) reported $75.83 million of net foreign investment outflows or “hot money” for the month of January, reversing the $291.35 million net inflows of the same period last year as investors in the stock market took out some gains.

The January net outflows was lower compared to what was withdrawn in December 2023 of $205.18 million.

Foreign investments are registered via authorized agent banks (AABs). These are inward foreign investments placed in listed securities, government bonds, time deposits, other debt instruments, and unit investment trust funds, among others.

In January, gross inflows totaled $1.235 billion while gross outflows reached $1.311 billion. Both are higher compared to January 2023’s $1.003 billion gross inflows and $712.56 million gross outflows.

About 62.7 percent or $775 million of registered investments were placed in listed securities at the Philippine Stock Exchange, such as banks, holding firms, property, transportation services and also food and beverage, tobacco.

Another 37.3 percent or $460 million were invested in peso-denominated government securities. The less than one percent remaining were in other instruments.

“Investments for the month mostly came from the United Kingdom, United States, Singapore, Luxembourg, and Hongkong with combined share to total at 85.5 percent,” said the BSP.

Meanwhile, the US is still “the top destination of outflows” with 45.8 percent of outward remittances, or about $600 million.

Last year, the central bank-registered hot money reversed to a net outflow of $247.3 million versus the $886.7 million net inflows in 2022. It also did not reach the BSP target of $1 billion.

Investors in the stock market and other money instruments withdrew funds last year for profits.

For 2024, the BSP is projecting net hot money will reach $1.7 billion.

The registration of foreign investments with the BSP is optional under the rules on foreign exchange (FX) transactions.

As explained by the BSP -- “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.

The registration of foreign investments with the BSP is part of its international operations for the effective management of FX transactions.

Besides hot money which is also described as highly speculative funds, the BSP registers foreign direct investments and other forms of foreign investments to facilitate the banking system’s access to FX resources “while ensuring that it remains supportive of the country's thrust to promote a policy environment conducive to a sustained inflow of foreign investments to help foster economic development and growth,” said the BSP.