Hot money swings to 315 million dollar outflow in August

MANILA, Philippines — Foreign portfolio investments swung back to a net outflow in August, reversing three straight months of net inflows, as renewed geopolitical tensions, higher oil prices and inflation concerns weighed on investor sentiment.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed foreign portfolio investments registered through authorized agent banks posted a net outflow of $315.41 million in August, a reversal of the $2.3-billion net inflow recorded in the same month last year.

The August result also reversed the $66.47-million net inflow in July.

Foreign portfolio investments refer to funds placed by overseas investors in financial assets that can be bought and sold relatively quickly, such as stocks and government securities. They are commonly called “hot money” because the funds can move rapidly across markets as investor sentiment and economic conditions change.

Based on BSP data, gross inflows plunged by 56.2 percent to $1.83 billion in August from $4.18 billion a year earlier. They were also 22.8 percent lower than the $2.37 billion recorded in July.

Meanwhile, gross outflows increased by 13.8 percent year-on-year to $2.14 billion from $1.88 billion, although they declined by seven percent from $2.30 billion in July.

The combination of weaker inflows and still-elevated withdrawals pushed the country back into a net outflow position for the month.

RCBC chief economist Michael Ricafort attributed the August reversal largely to renewed uncertainty surrounding the conflict between the United States and Iran after a 60-day interim ceasefire lapsed on Aug. 17 without a new agreement.

Ricafort said the absence of a new deal led to renewed retaliatory attacks that also involved oil tankers, adding to concerns over global energy supplies and pushing crude oil prices higher.

The August net outflow brought the cumulative withdrawal of registered foreign investments to $4.25 billion in the first eight months, a sharp reversal of the $4.58-billion net inflow recorded in the same period last year.

Gross inflows from January to August declined by 6.3 percent to $17.44 billion from $18.62 billion a year ago. At the same time, gross outflows jumped by 54.6 percent to $21.69 billion from $14.03 billion in the comparable period in 2025.

Ricafort said risks to portfolio flows could remain elevated in the coming months as global crude oil prices stay near their highest levels in four years. He also cited the peso’s weakness against the dollar, which could raise import costs and add to inflationary pressures.

Another risk is the possibility of a strong El Niño drought from the fourth quarter through early 2027, which Ricafort said could push up prices of food, rice, other agricultural products and electricity.

Persistent inflationary pressures could, in turn, increase the likelihood of further monetary tightening and higher borrowing costs, he said.