‘Hot money’ outflows eased in April as sentiment improved

MANILA, Philippines – The Philippine financial market recorded a smaller net outflow of foreign portfolio investments in April, as a slight improvement in global risk sentiment helped temper withdrawals.

Data from the Bangko Sentral ng Pilipinas showed that foreign portfolio investment (FPI) outflows registered with the central bank had exceeded inflows by $1.6 billion for the month, easing from nearly $2 billion in net withdrawals in March.

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But it was a reversal from the $857-million net inflow recorded a year earlier. In the January-April period, total net outflows amounted to $4.4 billion.

Such investments, often referred to as “hot money,” are prone to swift reversals at the first sign of unfavorable conditions.

These funds—often invested in liquid instruments like stocks and bonds—are far more sensitive to shifts in domestic and global sentiment than foreign direct investments, which tend to stay for longer term and are more closely tied to job creation.

By type of instrument, government securities—including Treasury bonds and Treasury bills—posted a net outflow of $1.1 billion in April, moderating from the $1.3-billion net outflow in the preceding month.

Meanwhile, local equities saw a hot money net outflow of $545 million, easing March’s $653 million net outflow.

The Philippine Stock Exchange index ended the trading month of April at 5,833.64 points, down by 1.9 percent from the March close as investors weighed the compounding risks of surging energy costs, persistent inflation and weakening local currency. Net foreign selling reached P11.72 billion in April, lower than the P14.10-billion net outflow recorded in the previous month.

“April’s smaller outflow reflects a pause rather than a reversal—global risk sentiment improved a bit, local yields and valuations became more compelling after earlier sell-offs, and the peso stabilized, reducing the urgency to exit,” said Jonathan Ravelas, senior adviser at Reyes Tacandong & Co.

“That said, we’re not out of the woods. Flows will remain volatile and largely driven by external factors like US interest rates, the dollar and geopolitics,” he added.

Looking ahead, the central bank now expects total FPIs—including transactions not registered with the BSP—to post a net inflow of $3.7 billion in 2026, lower than its previous estimate of $5.6 billion.

“In the coming months, flows may remain choppy, with periods of both inflows and outflows, depending on how global markets, the US Federal Reserve and the peso evolve,” Robert Dan Roces, group economist at SM Investments, said. INQ