Philippines lures $2.1 billion in hot money in 2024, but below expectations


Foreign portfolio investments (FPI) or net “hot money” that entered the country in 2024 totaled $2.103 billion, reversing the $248.84 million net outflows recorded in 2023, based on Bangko Sentral ng Pilipinas (BSP) data.

The end-2024 net FPI is, however, way below the BSP’s projection of $6.3 billion for the year.

Hot money portfolios are 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 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.

For December alone, the net FPI outflows totaled $487.37 million, higher than the withdrawals in 2023 of $205.18 million. 

Gross inflows in December totaled $1.055 billion, while gross outflows amounted to $1.542 billion. The most active investors came from the United Kingdom, US, Singapore, Germany and Ireland, with 76.3 percent of the total portfolio funds.

Based on BSP data, about 51.7 percent or $545.56 million of hot money in December was invested in peso-denominated government securities. The other 48.3 percent, or $509.91 million, were invested in listed stocks such as banks, property, transportation services, holding firms, and food/beverage/tobacco.

For 2024, the BSP said some $897.53 million of foreign funds exited the Philippine stock market. This was smaller compared to the $1.02 billion net outflows in 2023.

The BSP also recorded $3 billion worth of hot money net inflows in peso-denominated government securities, higher than the previous year’s $781.08 million.  

Overall, foreign investments registered with the BSP through AABs amounted to $17.932 billion in 2024, more than the $12.886 billion in 2023.

The BSP said 54.2 percent of gross inflows were invested in government securities while the balance or 45.8 percent were placed in listed securities at the Philippine Stock Exchange.

Last year, the top investor countries with a total share of 86.3 percent of the gross inflows were the UK, Singapore, US, Luxembourg, and Hong Kong.

Meanwhile, gross outflows, or the total funds that exited the country in 2024, amounted to $15.829 billion, higher than $13.135 billion in 2023.

About 96 percent of withdrawn funds were capital repatriation, while the remaining four percent were remittance of earnings. “The US continued to be the main destination of outflows with 49.8 percent of the total,” said the BSP.

Hot money, which are highly speculative foreign portfolio funds, includes money market instruments that are tradable in the market. They are referred to as hot money because of its short-term nature.

For 2025, the BSP, in its latest overall balance of payments (BOP) estimates, said the sustained net inflows from the financial account will continue to boost the overall BOP outlook this year. FPI is part of the components of the BOP.

With an environment of moderating global inflation and improved business activity, and despite US-related uncertainty, such as its policy shifts in the US trade, the BSP forecasts net hot money will reach $3.1 billion inflows in 2025.

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 and 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.