Foreign portfolio investments, or hot money, yielded net inflows of $15 million in January, a reversal of the $4-million net outflows registered in December 2021, data from the Bangko Sentral ng Pilipinas show.
The January 2022 figure, however, was down 85 percent from the $98-million net inflows recorded in the same month last year.
The BSP said in a statement Friday the January net inflows resulted from the $731-million gross inflows and $717-million gross outflows for the month.
Registered investments decreased by 45.1 percent or $600 million in January from $1.3 billion recorded in December2021. “Majority of investments [or 68.0 percent] registered were in Philippine Stock Exchange-listed securities [investments mainly in holding firms; property; banks; food, beverage, and tobacco; and telecommunications] while the remaining 32.0 percent went to investments in peso government securities,” the BSP said.
The top five sources of these funds were the United Kingdom, the United States, Luxembourg, Switzerland and Malaysia, with combined share of 82.0 percent.
The $717-million gross outflows went down by 46.4 percent, or by $619 million, from $1.3 billion recorded in December 2021.
Foreign portfolio investments are also called “hot money” because of the ease they are invested in and taken out of the domestic financial markets.
Registration of inward foreign investments with the BSP is optional under the rules on foreign exchange transactions. It is required only if the investor or its representative will purchase foreign exchange from authorized agent banks and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment.
Without such registration, the foreign investor can still repatriate capital and remit earnings on its investment but the foreign exchange will have to be sourced outside the banking system.
Hot money posted recorded net outflows of $574 million in 2021, missing the target of $1.5-billion net inflows set for the year by the BSP.
The BSP expected foreign portfolio investments to recover with $5.7-billion net inflows this year.