The central bank registered in November $488.75 million of net foreign investment inflows, otherwise known as "hot money" because of its speculative nature, more than five times higher than October’s $83.44 million, with investors mostly buying big listed stocks such as banks and property, and government bonds.
These speculative hot money that the Bangko Sentral ng Pilipinas (BSP) used to call foreign portfolio investments, are inward foreign investments registered with authorized agent banks (AABs) and placed in listed securities, peso-denominated government securities, time deposits, other debt instruments, and unit investment trust funds. Hot money also refers to flows between financial markets as investors attempt to ensure they get the highest short-term gains possible.
For the month of November, gross inflows amounted to $1.05 billion versus $565.71 million gross outflows, resulting in a net inflow of $488.75 million.
Compared with the same period in 2021, gross inflows and outflows were lower from $1.284 billion and $1.174 billion, respectively, for a net foreign investment of $109.56 million last year.
The BSP in a statement late Thursday, Dec. 29, said about 55.1 percent of hot money were invested in companies listed at the Philippine Stock Exchange, such as banks, holding firms, property, food, beverage and tobacco, and telecommunications.
The other 44.8 percent registered inflows were placed in peso-denominated government securities while just one percent were in other instruments.
Majority of investments came from the United Kingdom, US, Netherlands, Luxembourg and Singapore, with combined share to total at 83.5 percent.
The BSP said the US received 71.7 percent of total outward remittances.
From January to November 2022, the central bank registered $799.54 million net inflows. This came from gross inflows of $11.382 billion and gross outflows of $10.583 billion.
The BSP expects net foreign investment inflows via AABs to be subdued this year due to the downscaled global growth outlook and tighter financial conditions.
However for 2022, the BSP still forecasts $3.5 billion worth of net hot money inflows while for 2023, they expect $5 billion.
“Both foreign direct investments and foreign portfolio investments are expected to lead to sustained inflows, albeit at a more modest level than initially anticipated, following dampened investor sentiment from external headwinds,” said the BSP.