Net hot money outflows rise to $312 M in April


The Bangko Sentral ng Pilipinas (BSP) said net hot money withdrawals for the month of April totaled $312.18 million, more than the $236.02 million outflows in March as investors took gains for profit-taking.

Foreign investments registered with the BSP, formerly called foreign portfolio investments or hot money, are monitored via the authorized agent banks (AABs).

The April hot money is lower compared to outflows in the same period last year of $351.87 million.

Transactions on foreign investments had gross outflows of $1.225 billion during the period versus gross inflows of $913.62 million. Both April 2024 figures are higher than the previous year of $1.064 billion gross outflows and $712.83 million gross inflows.

As of end-April, the total net hot money yielded a small inflow of $44.33 million. This is an improvement compared to the $730 million outflows in the first four months of 2023.

Based on BSP data, 59.5 percent or $544 million of registered investments were in listed securities in the Philippine Stock Exchange. These were investments in these sectors: banks; holding firms; property; transportation services; and food, beverage and tobacco.

The remaining 40.5 percent or $370 million were in peso-denominated government securities.

Meanwhile, the BSP said investments for the month mostly came from the US, the United Kingdom, Singapore, Luxembourg, and Hong Kong. The five countries have a combined share to total of 87.9 percent.

The US continues to be the top destination of outflows with 40.3 percent or $527 million of total outward remittances.

Hot money investments refer to the following inward foreign investments registered with AABs: publicly-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. 

For this year, the central bank noted that foreign portfolio investments as well as foreign direct investments are expected to have “moderate net gains” which will be “supported by the government’s thrust to fully implement key amendatory laws that eased rules on foreign investor participation in key industries” as well as its plan to keep infrastructure spending at above five percent of gross domestic product.

The BSP estimates that hot money portfolios will reach $1.3 billion net inflows by the end of 2024 and $1 billion next year.

It is optional for AABs to register inward foreign investments with the BSP. It is required only if the investor or its representative will purchase foreign currency from these banks or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment, said the BSP.

The BSP added that without such registration, the foreign investor can still repatriate capital and remit earnings on its investment but the foreign exchange will have to be sourced outside the banking system.