Foreign portfolio investments, often referred to as “hot money”, yielded net inflows of $377 million in the first quarter this year, a turnaround from the $328 million net outflows transacted in the same period last year, according to the Bangko Sentral ng Pilipinas.

For March alone, the “hot money” portfolios reversed to a net outflow of $236.02 million from the February net inflows of $689.27 billion as funds were withdrawn for short-term profits.

The $236.02-million net outflow was higher compared to same period last year of $70.26 million hot money that exited.

Gross inflows in March totalled $1.407 billion while gross outflows reached $1.643 billion. “The US remains to be the top destination of outflows, receiving US$887 million (or 53.9 percent) of total outward remittances,” said the BSP.

For January to March, total gross inflows amounted to $4.191 billion while total gross outflows reached $3.814 billion.

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

These 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 the month of March, 56.7 percent or $798 million of registered investments were placed in listed companies in the Philippine Stock Exchange (PSE). These funds were invested in banks; holding firms; property; transportation services; and food, beverage and tobacco.

The remaining 43.3 percent or $610 million were in peso-denominated government securities.

Meanwhile, about 83.6 percent of hot money investments mostly came from investors based in the United Kingdom, Singapore, US, Switzerland, and Luxembourg.

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.