Foreign investors pulled more money out of Philippine financial assets than they brought in during the first seven months of 2026, reversing the net inflows a year ago as geopolitical tensions, inflation risks, and volatile markets prompted greater caution toward emerging-market (EM) assets.

The latest Bangko Sentral ng Pilipinas (BSP) data showed that foreign portfolio investments, commonly called “hot money,” registered net outflows of $3.94 billion from January to July, a turnaround from the $2.25 billion in net inflows recorded in the same period last year.

Union Bank of the Philippines (UnionBank) chief economist Ruben Carlo O. Asuncion said the reversal reflected greater caution among foreign investors toward riskier EM assets amid heightened global uncertainty.

Asuncion said that while the Philippines continues to attract foreign portfolio investments, “overall withdrawals have outweighed new placements this year as investors respond to heightened geopolitical tensions, elevated inflation risks, volatile financial markets, and concerns over global growth.”

He said portfolio flows are largely influenced by global investor sentiment rather than domestic conditions, adding that the net outflows do not necessarily signal weaker confidence in the Philippines but reflect investors’ increased caution and preference for flexibility amid global uncertainty.

The weakening trend was also evident in July, when hot money recorded a net inflow of just $66 million—the smallest monthly net inflow so far this year and the lowest in three months.

While July marked the third consecutive month of net inflows following $232 million in May and $170 million in June, the figures showed that the monthly surplus had steadily narrowed during the three-month period.

The July net inflow was also a fraction of the $743 million recorded in the same month last year. The highest monthly net inflow so far this year was February’s $284 million.

Hot money refers to foreign investments registered with the BSP through authorized agent banks (AABs) that can be readily moved into and out of financial markets depending on investors’ appetite for risk and changes in economic, financial, or political conditions.

These portfolio investments are called hot money because of their short-term and highly liquid nature, making them more susceptible to rapid withdrawals during periods of heightened uncertainty.

Registered foreign portfolio investments may be placed in listed securities, peso-denominated government securities (GS), time deposits with maturities of at least 90 days, other debt instruments, unit investment trust funds (UITFs), exchange-traded funds (ETFs), and Philippine depositary receipts (PDRs).

From January to July, gross outflows surged to $19.55 billion, exceeding the $15.61 billion in gross inflows. In the same period last year, gross inflows stood at $14.44 billion, while gross outflows were lower at $12.16 billion.

Both major asset classes recorded net outflows during the seven-month period. Government debt securities posted net outflows of $2.21 billion, while listed securities on the Philippine Stock Exchange (PSE) registered net outflows of $1.73 billion.

This was a reversal from the same period last year, when GS generated net inflows of $3.74 billion, which more than offset the $1.46 billion in net outflows from listed securities.