PH posted net ‘hot money’ inflows of $887M in 2022

More ‘hot money’ came in than went out of the Philippines in 2022 for a total net inflow of $887 million in short-term investments, according to data from the Bangko Sentral ng Pilipinas (BSP), a reversal of the net outflow of $574 million in 2021 that was helped partly by rising interest in government securities.

The BSP said in a statement that similar improvements were observed in such investments that were placed in shares listed on the Philippine Stock Exchange (PSE) as investors’ risk appetite increased.

Transactions in PSE-listed shares resulted in net inflows of $179 million from net outflows of $956 million in 2021.

Also, transactions in peso-denominated government-issued debt paper recorded net inflows of $694 million in 2022, jumping from $398 million in net inflows in the previous year.

Full-year gross inflows shrank by 9.4 percent to $12.3 billion from $13.6 billion in 2021 as did gross outflows by 19.3 percent to $11.5 billion from $14.2 billion.

About four-fifths or 78 percent of gross inflows in 2021 were invested in Philippine Stock Exchange-listed securities issued by companies engaged in electricity, energy, power and water; property; holding firms; banks; and food, beverage and tobacco.

About one-fifth or 22 percent was lent to the government through investments in peso-denominated state securities.

Downward correction

In 2022, 82 percent of gross inflows came from the United Kingdom, Singapore, United States, Luxembourg, and Hong Kong.

Of the outflows, 95 percent represented capital that was sent back to investors’ home countries while the remainder accounted for the remittance of earnings. Also, 73 percent went to the United States.

In December alone, net inflows were lower at $93 million from $489 million in preceding month.

Gross inflows in December logged at $1.09 billion while gross outflows were pegged at $999 million.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said monthly tallies pointed to net inflows for the third straight month and was the second highest amount since the pandemic started in 2020.

Ricafort said the share of peso government securities in gross inflows for the month was 26 percent higher year-on-year in December.

This happened “as long-term government securities yields topped out [amid] lower US and global bond yields, and downward correction [weakening] of the US dollar against major global currencies,” he added.—Ronnel W. Domingo