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Manila Bulletin devider Business devider Banking & Finance devider Hot money inflows surge in July

Hot money inflows surge in July

Published Aug 31, 2023 08:45 am

At A Glance

  • Foreign investment net inflows reached $962.04 million in July versus less than $1 million in June.
  • Based on Bangko Sentral ng Pilipinas (BSP) data, these inflows or "hot money" amounted only to a net inflow of $81.71 million for the first seven months.
  • About 63.2% or $996 million of registered investments in July were in peso government securities while about 36.8% or $580 million were in listed securities in the stockmarket.

Market investors boosted the country's foreign investment net inflows -- also called “hot money” -- for the month of July to $962.04 million from less than $1 million in June, based on Bangko Sentral ng Pilipinas (BSP) data.

Investors were active in July and there was more trading in both the debt and stock markets. The registered hot money in July this year was also better than same period in 2022 of $103.14 million net outflows.

Foreign investments registered with the BSP, formerly called foreign portfolio investments or hot money, are monitored via the authorized agent banks (AABs).

Gross inflows in July was at $1.576 billion while gross outflows totaled $614.48 million. Compared to same period in 2022 of $680.73 million, gross inflows in July 2023 was higher. Gross outflows last year was bigger at $783.87 million.

Based on BSP data released on Thursday, Aug. 31, for the first seven months of 2023, foreign investments through AABs amounted to a net inflow of $81.71 million.

This came from total gross inflows of $7.125 billion for the January-July period, and gross outflows of $7.043 billion. Investors, mostly in the stock market, are still taking out gains than investing for the short-term.

The BSP said 63.2 percent or $996 million of registered investments were in peso government securities while about 36.8 percent were in listed securities in the stockmarket amounting to $580 million.

These speculative funds were invested in banks property food, beverage and tobacco, holding firms, and transportation services.

About one percent of total hot money inflows were invested in other instruments.

Meanwhile, the BSP said the top five investor countries for the month of July were the United Kingdom, US, Singapore, Luxembourg, and Germany with combined share to total at 85.7 percent.

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 AABs or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment, said the BSP.

For 2023, the BSP forecasts net foreign investments of $2.5 billion. Next year, the estimate is $3.5 billion.

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

Hot money investments are inward foreign investments registered with AABs. These are invested not just in PSE-listed securities and government securities, but also in peso-denominated time deposits with banks with minimum tenor of 90 days, and other debt instruments. It can also be channeled in unit investment trust funds and other instruments such as Exchange Traded Funds and Philippine Depositary Receipts.

 

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