The flow of short-term foreign investments or “hot money” that are registered with the Bangko Sentral ng Pilipinas (BSP) reversed to a net outflow of $531 million in February after four straight months of net inflows.
Data at the BSP show that there were net inflows of $292 million in January and $274 million in February 2022.
The BSP said in a statement that, in February, $680 million in BSP-registered foreign investments flowed in while $1.2 billion flowed out.
About two-thirds or 67 percent of gross outflows went to the United States.
Compared to numbers in January, last month’s gross inflows meant a 32-percent drop from $1 billion. At the same time, gross outflows in February represented a 70-percent surge from $712 million in January.
Net inflow of ‘hot money’ skyrocketed in Jan to $292M
Compared to year ago figures, gross inflows fell by 28 percent from $945 million while gross outflows jumped by 81 percent from $670 million. The February data brought two-month traffic to a net $239 million flowing out from the Philippines. This was a reversal from the net inflows of $289 million posted in January-February of 2022.
Meanwhile, four-fifths of gross inflows were put into Philippine Stock Exchange-listed shares while one-fifth was invested in government securities.
For inflows into PSE-listed securities, these mainly went to shares in companies that are engaged in banking and operating as holding firms as well as those in the business of property; food; beverage and tobacco; and electricity, energy, power and water.
Of the gross inflows, 82 percent came from the United Kingdom, United States, Luxembourg, Hong Kong and Singapore.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said February net outflows were the heaviest in almost two years since the $541 million recorded in March 2021.
Global jitters trigger foreign ‘hot money’ exit
Back then, investor sentiment was influenced partly by delays in the government’s response to COVID-19 as vaccine shipments were arriving late.
Ricafort noted that, this time, the direction of portfolio investment flows was influenced by some volatility in the global and local financial markets, rising tensions between Washington and Beijing, as well as the slower-than-expected slowing of US inflation data that led to more hawkish signals from the US Federal Reserve.
Ricafort said the monthly outbound direction may continue in the coming months as financial markets go even more volatile due to the failure of Silicon Valley Bank and Signature Bank in the United States as well as possible additional policy rate hikes at the US Fed, the continuing risk of recession and geopolitical tensions.