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Manila Bulletin devider Business devider Banking & Finance devider $247-M 'hot money' exits PH in 2023

$247-M 'hot money' exits PH in 2023

Published Jan 25, 2024 08:59 am

The country’s “hot money” or the highly speculative central bank-registered foreign investments reversed to a net outflow of $247.3 million as of Dec. 29 last year, compared to the $886.7 million net inflows in 2022, based on Bangko Sentral ng Pilipinas (BSP) data.

Last year’s hot money data was short of expectation. The BSP’s 2023 forecast for its registered foreign investments was $1 billion net inflows.

Investors in the stock market and other money instruments withdrew funds last year for profits. Foreign investments registered with the BSP, formerly called foreign portfolio investments, are monitored via the authorized agent banks (AABs).

The BSP said Thursday, Jan. 25, that gross inflows totaled $12.886 billion in 2023 while gross outflows amounted to $13.133 billion.

“These investments were predominantly investments in PSE-listed securities (57.3 percent) mostly in banks; property; holding firms; food, beverage & tobacco; and transportation services,” said the BSP.

About 42.7 percent of total inflows were invested in peso-denominated government securities and only one percent are placed in other investments.

Last year, the top five investor countries were the United Kingdom, US, Singapore, Luxembourg, and Japan with a combined share to total of 83.5 percent.

Meanwhile, 95.1 percent of outflows were capital repatriation while about 4.9 percent were remittance of earnings, said the BSP. “The US continued to be the main destination of outflows with 63.6 percent of total,” it added.

For the month of December alone, hot money also reversed to a net outflow of $205.18 million versus a net outflow of $92.95 million in 2022. Gross inflows in December amounted to $1.065 billion while gross outflows totaled $1.27 billion.

During the month, 52.9 percent of registered investments were in PSE-listed securities while 47.1 percent where in government securities.

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.

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 AABs or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment, said the BSP.

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

Last year, the BSP registered $886.7 million of net hot money inflows. This was lower than the projected $3.5 billion for 2022. 

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