Hot money investors withdraw $700 M in September

Foreign investments or “hot money” portfolios, majority of which are invested in the stock market, reversed to a net outflow of $698.01 million in September versus $153.4 million net inflows in August as investors withdrew funds for profits.

Based on Bangko Sentral ng Pilipinas (BSP) data, for the January to September period, the highly speculative hot money recorded a net outflow of $386.79 million in contrast to same period last year of $221.51 million net inflows.

Foreign investments registered with the BSP, formerly called foreign portfolio investments, are monitored via the authorized agent banks (AABs). These investments refer to the following inward foreign investments registered with AABs: publicly-listed securities; peso-denominated government securities; peso time deposits with banks with minimum tenor of 90 days; other peso debt instruments; unit investment trust funds; and other instruments such as Exchange Traded Funds and Philippine Depositary Receipts.

For the month of September only, gross transactions on foreign investment inflows registered with BSP totaled $887.61 million in contrast to gross outflows amounting to $1.585 billion.

Meanwhile, for the nine-month period, gross inflows totaled $9.291 billion while gross outflows reached $9.678 billion.

According to the BSP, about 52.1 percent of registered investments were in listed securities at the Philippine Stock Exchange worth $462 million. Most of which were investments in banks; holding firms; property; food, beverage and tobacco; and utilities companies.

Another 47.9 percent were invested in peso-denominated government securities worth $425 million.

The BSP said 88.5 percent of gross inflows came from investors based in the United Kingdom, Singapore, US, Luxembourg and Switzerland.

“The US remains to be the top destination of outflows, receiving $1 billion (or 63.6 percent) of total outward remittances,” said the central bank.

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 hot money will reach $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. — Lee C. Chipongian

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