Net inflow of ‘hot money’ skyrocketed in Jan to $292M

Short-term foreign investments or “hot money” registered with the Bangko Sentral ng Pilipinas (BSP) skyrocketed to $292 million in January 2023, about 20 times as large as the $14.6 million recorded in January 2022.

This was also more than triple the $93-million net inflow in December and also marked the fourth month in a row that the BSP saw more hot money going in than flowing out.

Close to two-thirds (63 percent or about $630 million) of gross inflows were put into Philippine Stock Exchange (PSE)-listed shares while 37 percent went to peso-denominated government securities, the BSP said in a statement.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., noted that the share of peso-tagged state borrowings in gross inflows ballooned from 26 percent in December as well as the full-year 2022 average of 22 percent.

Still, Ricafort said the share of government securities in gross inflows continued to be lower than the 45 percent recorded in November 2022, as yields on long-term Philippine Treasury bonds decreased in January.

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 food, beverage and tobacco.

In January, more than four-fifths (84 percent or $840 million) of gross inflows came from the United Kingdom, the United States, Singapore, Luxembourg and Hong Kong.

Meanwhile, 69 percent (about $491 million) of the gross outflows went to the United States.

Compared with numbers in January 2022, last month’s gross inflows represented an increase of 37 percent while gross outflows showed a decrease of 0.5 percent from $731 million.

“The continued net portfolio investments inflows data in January 2023 may have to do with improvement in global market risk appetite as the US stock markets and bond markets bottomed out in terms of price since October 2022,” Ricafort said.