‘Hot money’ snaps 3-month net inflow streak | Inquirer Business
Due to inflation, geopolitical woes

‘Hot money’ snaps 3-month net inflow streak

MANILA  -More flighty foreign funds left the country against those that entered in September, snapping three straight months of net inflows amid investor unease over the conflict in the Middle East and resurgent inflation at home.

Foreign portfolio investments recorded net outflows of $698 million, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

Also known as “hot money” because of their volatile nature, foreign portfolio investments are highly sensitive to developments at home and abroad unlike firmer commitments like foreign direct investments.

Article continues after this advertisement

A net outflow means more short-term foreign funds exited during a period compared to those that entered, while a net inflow occurs when the reverse happens.

FEATURED STORIES

The BSP expects to close 2023 with a $2-billion hot money net inflow, lower than its previous projection of $2.5 billion net inflows, as a high interest rate environment impedes investment decisions.

Data showed September’s outflow broke three consecutive months of net inflows. Year-to-date, hot money registered a net outflow of $387 million, a turnaround from $222 million net inflows posted in the same period last year.

Article continues after this advertisement

High inflation, Israel-Hamas clash

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said a stubbornly high domestic inflation rate and the Israel-Hamas clash, which could stoke oil prices, frayed investor nerves during the month.

Article continues after this advertisement

READ: PH inflation rose to 6.1% in Sept as food prices, transport cost soared

Article continues after this advertisement

“For the coming months, the Israel-Hamas war since October 7 added to global market volatility and could weigh on the net foreign portfolio investments data,” Ricafort said.

Broken down, short-term funds amounting to $1.6 billion left the country in September, with the US receiving most of the outward remittances looking for safe havens.

Article continues after this advertisement

That was bigger compared to the $888 million gross inflows in September, which was down by 38.4 percent from the previous month.

Figures showed 52.1 percent of registered investments last month went to publicly-listed companies while the remaining, or 47.9 percent, went to government securities like Treasury bonds and Treasury bills. Investments for the month mostly came from the United Kingdom, Singapore, the US, Luxembourg and Switzerland with combined share to total at 88.5 percent.

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Subscribe to our daily newsletter

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

TAGS: BSP, Israel, portfolio investment

Your subscription could not be saved. Please try again.
Your subscription has been successful.

Subscribe to our newsletter!

By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy.

© Copyright 1997-2024 INQUIRER.net | All Rights Reserved

This is an information message

We use cookies to enhance your experience. By continuing, you agree to our use of cookies. Learn more here.