Net foreign investments registered with the central bank totaled $533.95 million for the month of August, down from $1.383 billion in July, based on the latest Bangko Sental ng Pilipinas (BSP) data.
Compared to same month last year, the $533.95 million net inflows in August is higher than $153.46 million recorded at the time.
These funds, more commonly referred to as “hot money” which are highly speculative foreign portfolio money, on a year-to-date basis reached $1.998 billion as of end-August, significantly more than same period last year of $310.77 million.
BSP numbers showed that in August, gross inflows totaled $1.37 billion while gross outflows amounted to $836.78 million.
For the January to August period, gross inflows were $11 billion while gross outflows totaled $9 billion.
Portfolio investments which also includes money market instruments are tradable in the market. These are referred to as hot money because of its short-term nature.
With investors more confident in playing the stock market with impending policy rate reductions both local and globally, 51.2 percent or $702.83 million of registered investments were placed in listed securities in August, mostly invested in listed banks, transportation services, holding firms, property, and food, beverage and tobacco sector.
About 48.8 percent or $668.89 million were invested in peso-denominated government securities.
The August hot money investments mostly came from investors based in Singapore, the US, the United Kingdom, Luxembourg and Malaysia. These five countries have a combined share to total of 81.5 percent.
Hot money portfolios are foreign investments registered with BSP through authorized agent banks (AABs). Considered highly speculative funds, hot money investments are inward foreign investments invested not just in listed securities and government securities, but also in peso-denominated time deposits with banks with minimum tenor of 90 days, and other debt instruments. It can also be invested in 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 net hot money could reach $4.2 billion in 2024, higher than actual 2023 portfolio investments of $600 million. For next year, the central bank forecasts $2.9 billion net hot money inflows.