More ‘hot money’ enters PH for 3rd straight month

MANILA  -The monthly ebb and flow of short-term investments or “hot money” that are registered with the Bangko Sentral ng Pilipinas (BSP) showed net inflows for the third month in a row at $153.46 million in August.

This brought the year-to-date or January-August tally to net inflows $311.22 million.

The readout for August alone was a turnaround from net outflows of $86.29 million in the same month of 2022.

However, the net inflows in August was just about one-sixth of the $962.04 million recorded in the previous month or last July.

Gross inflows last August reached $1.44 billion, decreasing by 8.6 percent from $1.58 billion in July. But it was 82 percent more than the $791.59-million net inflows in August last year.

About three-fourths or 74.2 percent of gross inflows in August was invested into companies that trade shares at the Philippine Stock Exchange, specifically those that are engaged in banking; property; operating as holding firms; dealing in food, beverage and tobacco; and those in transportation services business.

Also, 25.8 percent was invested in peso-denominated government securities and other financial instruments.

Top sources of capital

Almost nine-tenths (88.9 percent) of the inbound capital came from Japan, the United Kingdom, United States, Luxembourg and Singapore.

On the other hand, $1.3 billion left the country in August, which was 109.5 percent more than the $614 million gross outflows a year ago.

The United States continued to be the top drawer of outbound remittances with 59.2 percent of gross outflows in August.

From January to August, net inflows of hot money showed was 60.8 percent less than the $793.86 net inflows recorded for the same eight months of 2022.

Balance of payments

Earlier this month, the BSP said the expected deficit in 2023 in the country’s balance of payments is now even narrower at just $100 million from the $1.2 billion forecast in June, amid better prospects in business process outsourcing and tourism.

READ: BSP trims ’23 BOP deficit forecast to $1.2B

The BSP’s forecasts for foreign direct investments (FDIs) and foreign portfolio investments or “hot money” have been adjusted downwards after taking into account the actual data for the first half of the year as well as the latest global and domestic growth prospects.

Net inflows of hot money are now predicted at $3 billion instead of $3.5 billion. Net FDI inflows are now seen settling at $10.5 billion instead of $11 billion.

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The central banks said that the lingering high interest rate environment had further impeded trade and investment decisions, thus, adding another layer of uncertainty to the BOP outlook for the year.