Hot money inflows surged to $274M in February, says BSP

Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)

There were more inflows of short-term investments into the Philippines than outflows in February, resulting in a net inflow of $274 million that ballooned from $14.6 million in January, according to the Bangko Sentral ng Pilipinas (BSP).

In February, a $945-million gross inflow of BSP-registered foreign portfolio investments surpassed a $670-million gross outflow.

Gross inflows in February meant a 29-percent month-on-month surge from $731 million in January.

Also, year-on-year net results in February was a turnaround from a net outflow of $40.4 million in the same month of 2021.

BSP data show that 79 percent of the February inflows went to publicly listed holding firms as well as listed companies that are engaged in banks; property; holding firms; food, beverage and tobacco; and transportation services.

The remaining 21 percent was invested in peso-denominated government securities.

Regarding the equities markets, First Metro Investment Corp. and the University of Asia and the Pacific noted in their latest monthly commentary that the Russian invasion of Ukraine “put a monkey wrench into the local bourse’s climb.”

“PSEi (Philippine Stock Exchange index) ended February mildly down by -0.7% to 7,311.01,” they said. “The fall in indexes in the United States and Europe pulled PSEi down, making it the lone loser in ASEAN (Association of Southeast Asian Nations) in February.”

Higher inflation

Moving forward, the two partners expect higher inflation due to the Russian invasion of Ukraine, which spells uncertainty and volatility in the local bourse “probably into the second quarter.”

In February, about three-fourths or 75.7 percent of net inflows again came from the United Kingdom, the United States, Luxembourg, Singapore and Hong Kong.

On the other hand, gross outflows in February were 6.5 percent lower than the $717 million recorded in January. Of the total, more than three quarters or 76.6 percent went to the United States.

Compared to the same month of 2021, there was a 51-percent drop in gross outflows from $1.38 billion.

For the first two months of the year combined, results showed a net inflow of $288.4 million, which was five times the $57.5-million net inflow recorded in the same period of 2021.

Under the rules on foreign exchange transactions, registration of inward foreign investments with the BSP is optional.

This 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.