Hot money outflow hits $27.3 million in June

MANILA, Philippines — More foreign capital left the Philippines in June as the Bangko Sentral ng Pilipinas (BSP) recorded net outflows of $27.3 million during the review period, reversing the $280,000 inflows a year ago and the $42.9 million that left the country in May.

However, short-term investments yielded net inflows of $80.8 million in the first half, a turnaround from the $804.3 million outflows in the same period last year.

Security Bank chief economist Robert Dan Roces said that despite the net outflow in June, there was a significant improvement in the first half compared to a year ago.

“While monthly fluctuations persist, the overall trend suggests improved investor sentiment toward the Philippine economy,” Roces said.

Foreign portfolio investments, also known as hot money or speculative funds, flow regularly between financial markets as investors attempt to ensure they get the highest short-term interest rates possible.

Based on preliminary data from the central bank, inflow of foreign portfolio investments through authorized agent banks climbed by 17.2 percent to $1.04 billion in June from $889.4 in the same month a year ago.

Majority of registered investments or 53 percent went to peso government securities and the remaining 47.2 percent were in securities listed in the Philippine Stock Exchange (PSE) particularly holding firms, banks, transportation services, property as well as electricity, energy, power and water.

The BSP said the top five investor countries in June were the United Kingdom, the United States, Singapore, Luxembourg and Switzerland with a combined share to total at 86.9 percent.

Meanwhile, gross outflows increased by 20.2 percent to $1.07 billion in June from $889 million. The US received 55.8 percent of total outward remittances.

For the first six months of the year, gross inflows climbed by 33.3 percent to $7.2 billion from a year ago level of $5.4 billion.

On the other hand, outflows increased by 14.5 percent to $7.1 billion during the six-month period from last year’s $6.2 billion.

Last year, the Philippines missed its net inflow target of $1 billion as the net outflow of speculative funds amounted to $248.84 million. This was also a reversal of the $887 million net inflow in 2022.

The BSP expects foreign portfolio investments to recover strongly with a net inflow of $3.1 billion for this year and $2.2 billion next year.