Hot money net inflows surged 542% to nearly $2b in 8 months

Net inflows of foreign portfolio investments or hot money reached $1.998.04 billion in the first eight months of 2024, larger by 542.9 percent than the $310.77-million net inflows seen in the same period last year, the Bangko Sentral ng Pilipinas said Tuesday.

The eight-month data have yet to capture the large inflows recorded in September when the stock market surged after the Bangko Sentral ng Pilipinas reduced its policy interest rates and reserve requirement ratio of major banks.

Data from the BSP showed that foreign investments registered through authorized agent banks in August recorded net inflows of $533.95 million, although the figure was lower than $1.383.25-billion net inflows noted in July.

Registered investments in August, considered as a “ghost month” went down by 43.7 percent, to $1.370.72 billion from $2.432.57 billion in July.

The BSP said 51.2 percent of registered investments went to Philippine Stock Exchange-listed securities ($701.83 million), with the remaining 48.8 percent parked in peso government securities ($668.89 million).

Investments mostly came from Singapore; the United States; the United Kingdom; Luxembourg; and Malaysia with combined share to total at 81.5 percent.

The $836.78 million gross outflows in August were also lower by 20.3 percent compared to the gross outflows of $1.049.31 billion in July.

The US remained the top destination of outflows, receiving $436.33 million (or 52.1 percent) of total outward remittances.

The BSP said that on a year-on-year basis, registered investments in August declined 4.8 percent from $1.440.59 billion recorded in August 2023, while gross outflows decreased by 35 percent from $1.287 billion.

The $533.95 million net inflows in August 2024, however, increased 247.9 percent from $153.46-million net inflows recorded in the same period last year.

Registration of inward foreign investments delegated to authorized agent banks by the BSP is optional under the rules on foreign exchange (FX) transactions.

“It is required only if the investor or its representative will purchase FX 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,” the BSP said.

“Without such registration, the foreign investor can still repatriate capital and remit earnings on its investment but the FX will have to be sourced outside the banking system,” it said.