Hot money nets $292M in January

The Bangko Sentral ng Pilipinas (BSP) registered $292.12 million “hot money” net investments for the month of January, higher than December’s $92.95 million and from same period in 2022 of $14.6 million.

Foreign investments are registered via authorized agent banks (AABs). These are inward foreign investments placed in listed securities, government bonds, time deposits, other debt instruments, and unit investment trust funds, among others.

Including the first week of February, net hot money inflows totaled $316.6 million. The first four days of the month registered $24.04 million of inflows, based on preliminary data released on Thursday, Feb. 23. The full February figure will be released in four weeks.

Gross inflows for the month of January totalled $1 billion while gross outflows reached $711.79 million. Both figures are lower than December’s $1.09 billion gross inflows and $999.12 million gross outflows. Compared to January 2022, current gross inflows are higher from $731.42 million while gross outflows are lower from $716.82 million.

The BSP said on Thursday that 62.8 percent of registered foreign investments in January are invested in listed firms at the Philippine Stock Exchange. These funds are placed in banks, holding firms, property, food, beverage and tobacco, and electricity, energy, power and water.

Another 37.2 percent are invested in peso-denominated government securities while one percent is in other instruments.

For the first month of 2023, the BSP traced these investments as coming from investors from the United Kingdom, US, Singapore, Luxembourg and Hong Kong. The combined share of the five countries is 83.8 percent of the total. Among these top investor countries, the US received 69.4 percent of total outward remittances, said the BSP.

Last year, the BSP registered $886.7 million net hot money inflows. This was lower than the projected net foreign portfolio investments of $3.5 billion for 2022.

For this year, the BSP estimate is $5 billion. Foreign portfolio investments are tallied under the financial account of the balance of payments data. The projection is that financial account inflows may be lower for 2023 due to the impact of the higher US interest rates on emerging market assets such as the Philippines.

The registration of foreign investments with the BSP is optional under the rules on foreign exchange (FX) transactions. As explained by the BSP, “it is required only if the investor or its representative will purchase FX from AABs and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment.”