Foreign portfolio investments registered with the Bangko Sentral ng Pilipinas (BSP) reversed to a net outflow of $529.68 million in October, compared to September's net inflow of $1.025 billion as investors sold securities to lock in gains.

The October net outflow is the largest this year, surpassing the $312.18 million outflow in April.

Often called "hot money" due to its short-term nature, these highly speculative foreign portfolio funds include tradable money market instruments.

The October net outflow of $529.68 million also exceeds the $328.19 million outflow recorded in the same period last year.

Year-to-date, BSP-registered foreign investments reached a net inflow of $2.494 billion as of the end of October, significantly higher than the $734.12 million recorded during the same period last year.

Gross inflows for October totaled $1.479 billion, while gross outflows amounted to $2.009 billion, according to BSP data.

"The US remains the top destination for outflows, receiving $889.06 million (or 44.2 percent) of total outward remittances," reported the BSP.

From January to October, gross inflows totaled $15.015 billion, while gross outflows reached $12.521 billion.

In October, 54.5 percent ($807.08 million) of registered investments went into listed securities on the Philippine Stock Exchange, primarily in sectors such as banks, holding firms, transportation services, property, and food, beverage, and tobacco.

The remaining 45.5 percent ($672.79 million) was invested in peso-denominated government securities.

The BSP noted that 87.8 percent of October's hot money portfolio originated from fund managers based in the United Kingdom, Singapore, the US, Luxembourg, and Malaysia.

These hot money portfolios are registered with the BSP through authorized agent banks (AABs).

While primarily invested in listed securities and government securities, hot money can also be placed in peso-denominated time deposits (with a minimum maturity of 90 days), other debt instruments, unit investment trust funds, exchange-traded funds (ETFs), and Philippine Depositary Receipts.

Registration of inward foreign investments with the BSP by AABs is optional. It is required only when investors need to purchase foreign currency from these banks or their affiliates for capital repatriation and remittance of earnings.

Unregistered foreign investors can still repatriate capital and remit earnings, but they must source foreign exchange outside the banking system.

The BSP projects net hot money inflows to reach $4.2 billion by the end of 2024, exceeding the $600 million recorded in 2023. For 2025, the BSP forecasts $2.9 billion in net hot money inflows.