Hot money net inflows total $887 M in 2022

The Bangko Sentral ng Pilipinas (BSP) registered $886.70 million in foreign investments or “hot money” net inflows in 2022, reversing by almost double the net outflows of $574.46 million in 2021.

The BSP had projected a net foreign portfolio investments of $3.5 billion for 2022. For this year, the estimate is $5 billion. These investments are inward foreign investments registered with authorized agent banks or AABs, and placed in listed securities, government bonds, time deposits, other debt instruments, and unit investment trust funds.

US dollar Reuters/File Photo (Manila Bulletin)

The BSP on Thursday, Jan. 26, reported that last year’s gross inflows amounted to $12.34 billion while gross outflows were $11.46 billion, resulting to a net inflow of $886.70 million.

These numbers are under the financial account of the balance of payments data. The BSP said last month that financial account flows will be lower because of the higher US Federal Reserve interest rates. “Hawkish US Fed could adversely impact on appetite for emerging market assets,” said the BSP.

About 78.2 percent of these investments were in listed securities, mainly in these sectors: electricity, energy, power and water; property; holding firms; banks; and food, beverage and tobacco. Another 21.6 percent were invested in peso-denominated government securities.

The top five investor countries were the United Kingdom, Singapore, US, Luxembourg, and Hong Kong with combined 81.8 percent of the total.

Last year, transactions in the Philippine Stock Exchange amounted to net inflows of $179 million which was also a reversal from the $956 million net outflows in 2021. Placements in the peso-denominated government securities totalled $694 million net inflows, higher compared to 2021’s $398 million net inflows.

For the month of December, the BSP registered net inflows of $92.95 million, which lower than $489 million net inflows in November. Total gross inflows amounted to $1.09 billion while gross outflows were $999 million.

About 74 percent of hot money inflows were in PSE-listed securities while 26 percent were in government securities.

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.”