Hot money reversed to net inflows in April

April saw net inflows of short-term investments worth $1.4 billion due to the country’s improving economy, reversing net outflows recorded in March and April of 2021.

In March, the Bangko Sentral ng Pilipinas (BSP) recorded net outflows of foreign portfolio investments (FPI) worth $305 million. In April last year, net outflows were pegged at $374 million.

According to the BSP, in April, gross inflows of $2.2 billion in BSP-registered FPI investments trumped gross outflows of $823 million.

Gross inflows in April were 71 percent more compared to the $1.3 billion that flowed in last March. Compared to a year ago, gross inflows surged by 235 percent from $651 million.

About 92 percent of gross inflows in April went to publicly listed holding firms as well as listed companies that are engaged in electricity, energy, power and water; banks; holding firms; property; and transportation services.

The remainder was invested in peso-denominated government securities.

In April, 94 percent of gross inflows came from Singapore, the United Kingdom, United States, Hong Kong, and Luxembourg.

Gross outflows in April— of which 61 percent went to the United States—were lower by 48 percent compared to the $1.6 billion that flowed out in March. Compared to April 2021, gross outflows shrank by 20 percent from $1 billion.

Further, from January to April this year, inbound and outbound hot money summed up at gross inflows of $1.3 billion. This was also a turnaround from the $857 million gross outflows observed in the same four months 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.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., noted that net inflows were “surprisingly at new prepandemic highs.”

Ricafort said the April results turned out as the domestic economy further re-opened towards greater normalcy with the lowest alert level.

—Ronnel W. Domingo