PH 2024 ‘hot money’ net inflow $2B reverses $249M outflow yr-earlier 

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Dec alone shows outflow vs inflow in Nov

Foreign portfolio investments, or “hot money,” for full-year 2024 recorded net inflows of $2.1 billion, reversing the $248.84 million net outflows recorded a year earlier, the Bangko Sentral ng Pilipinas (BSP) said. 

For December alone, a different movement is seen — data showed net outflows of nearly $500 million for the month, reversing net inflows of almost $100 million in November.

The BSP said in a statement on Friday net outflows totaled $487.37 million in December, compared with $96.59 million of net inflows a month earlier, the BSP said.

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For the month of December, 51.7 percent of registered investments were in peso government securities with 48.3 percent were in PSE-listed securities, mostly in banks, property, transportation services and holding firms.

“The markets continued to price-in possible protectionist measures by US President Donald Trump, such as higher US import tariffs and other America-first protectionist policies could lead to higher US inflation that, in turn, could lead to fewer future Fed rate cuts and possible trade war that could slow down global trade and overall world economic growth,” said Michael Ricafort, RCBC chief economist.

Ricafort said hot money in December was “still among the biggest monthly net outflows in more than a year or since September 2023.”

Gross hot money figures

BSP data showed gross outflows totaled $1.542 billion in December, in contrast to gross inflows of $1.05 billion for the month.

“The $1.54 billion gross outflows for the month were lower by $221.98 million, or 12.6 percent compared with the gross outflows of$1,764.82 million recorded in November 2024,” the BSP said.

 The US remains to be the top destination of outflows, receiving US$718.88 million (or 46.6 percent) of total outward remittances.

The US remains the top destination for outflows equivalent to 49.8 percent of the total.

For the whole year of 2024, hot money registered with the BSP, grossed $17.93 billion, a 39.2 percent increase or $5.04 billion compared with $12.88 billion in 2023.

These investments were predominantly investments in peso government securities, equivalent to 54.2 percent of the total, while 45.8 percent was invested in PSE-listed securities, mostly in banks, holding firms, property, transportation services and food, beverage & tobacco, the central bank said, and while other investments accounted for less than 1 percent of the total.

The UK, Singapore, US, Luxembourg, and Hongk Kong were the top five investor countries during the year, with a combined share to total at 86.3 percent, the BSP added.

Foreign portfolio investments are also called hot money because of the ease with which they can be moved in or out of the financial system.

The notable improvements in hot money “could be largely attributed to Fed rate cuts totaling 1.00 percent in 2024 and the total BSP rate cuts of 0.75 basis point for 2024 as this could reduce borrowing, spur more investments, employment, trade, and other business activities, said Ricafort.

Relatively favorable credit rating upgrades for the Philippines could drive positive sentiment from international investors, the RCBC economist said.

He cited the Japan Credit Rating Agency’s A-, “the first-ever A credit rating for the country, at 3 notches above the minimum investment grade on June 2020”

Standard and Poor’s revision of outlook from stable to positive while affirming the BBB+ credit rating in November 2024 as well as Moody’s affirmation with a stable outlook in August 2024, and Fitch Ratings’ BBB rating with stable outlook in June 2024 are all positives in favor of the country, Ricafor said.

“The country’s relatively favorable credit ratings have also partly supported the confidence toward the local financial markets, as these still fundamentally reflect the Philippines’ improved economic and credit fundamentals in recent years that may structurally help attract more foreign investments into the country,” he added. 

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