Hot money outflows narrowed in Q1, says BSP

Short-term investments chalked up a net outflow of $16 million in the first quarter, equivalent to just about 3 percent of the $467- million net outflow recorded in the same period of 2021.

But in March alone, there was a net outflow of foreign portfolio investments worth $305 million, a reversal from net inflows of $274 million in February but smaller than the $541 million net outflows in March 2021.

According to the Bangko Sentral ng Pilipinas (BSP), a $1.6-billion gross outflow of BSP-registered foreign portfolio investments in March prevailed over a $1.3-billion gross inflow. This can be attributed in part to the escalation of the war between Russia and Ukraine, spooking investors who rushed to less risky investment destinations abroad.

Gross outflows in March—of which 80 percent went to the United States—were more than double or 136 percent compared to the $670 million that flowed out in February.

At the same time, gross inflows were 35 percent higher compared to the $945 million registered investments that came in a month earlier.

About 87 percent of inflows in March went to publicly listed holding firms as well as listed companies that are engaged in property; food, beverage and tobacco; banks; and transportation services.

The remaining 13 percent was invested in peso-denominated government securities.

In March, more than three-fourths or 78 percent of gross inflows continued to come from the United Kingdom, United States, Luxembourg, Singapore and Hong Kong.

Compared to March 2021, there was a 16-percent jump in gross outflows from $1.4 billion.

Also, there was a 55-percent surge in gross inflows from $824 million.

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.

The first-quarter data came out as BSP Governor Benjamin Diokno on Wednesday told the Philippines-Singapore Business and Investment Summit that business sentiment and consumer outlook have become buoyant.

“The BSP’s consumer and business expectations surveys suggest broad improvements in outlook for the coming months largely due to the improving state of the economy and an uptick in the volume of demand and sales,” Diokno said.

The BSP chief said the resilience that the Philippine economy showed amid the COVID-19 pandemic enabled the government to maintain its investment grade ratings despite a wave of downgrades globally.

—Ronnel W. Domingo