The Bangko Sentral ng Pilipinas (BSP) said foreign investors with speculative “hot money” withdrew just $27.26 million for the month of June, reversing the small net inflows of $42.86 million registered in May.

The June net outflow was also in contrast to the smaller net inflow of $280,000 in the same period in 2023, based on the latest BSP data.

Portfolio investments or holdings as stocks, bonds and notes, and money market instruments are tradable in the market. These are referred to as hot money because of its short-term nature. “A portfolio investor will buy or sell a financial instrument at anytime there is an indication of immediate gain or loss,” according to the BSP, adding that such holdings “can easily be acquired or disposed of”.

Based on BSP numbers, the year-to-date transactions or January to June foreign portfolio investments monitored via authorized agent banks (AABs) recorded net inflows of $80.84 million, a turnaround from the $804.20 million net outflows same period last year.

For the month of June, gross inflows amounted to $1.042 billion while gross outflows totaled $1.069 billion.

From January to June, gross inflows totaled $7.2 billion while gross outflows amounted to $7.119 billion.

BSP data showed 52.8 percent or $551 million of registered hot money were invested in peso-denominated government securities.

The rest or 47.2 percent amounting to $492 million went into listed securities at the Philippine Stock Exchange. These funds were invested in holding firms, banks, transportation services, property, and electricity/energy/power/water sector.

About 86.9 percent of portfolio investments came from investors based in the United Kingdom, US, Singapore, Luxembourg, and Switzerland.

Hot money investments refer to the following inward foreign investments registered with AABs: publicly-listed securities; peso-denominated government securities; peso time deposits in 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 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.

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.

The BSP is projecting that for this year, net hot money could reach $3.1 billion, higher than actual 2023 portfolio investments of $600 million. For next year, the BSP forecasts $2.2 billion net hot money inflows.