Hot money net outflow at $352M

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SHORT-TERM investments made by foreign investors in April continue to remain in the net outflow territory as gross outflows outpaced total inflows, Bangko Sentral ng Pilipinas (BSP) data showed. The BSP said registered transactions on foreign investments through Authorized Agent Banks (AABs) recorded a net outflow of $352 million as result of gross outflows of $1.1 billion compared to gross inflows of $713 million.This is now the third consecutive month that short-term investments posted net outflows.“This is higher compared to the net outflows recorded in March 2023 [US$70 million] and a reversal compared to the net inflows recorded in April 2022 [US$1.4 billion],” the BSP said in a statement on Thursday.The BSP noted that the gross inflows recorded in April was 43.2 percent lower than the $1.3 billion recorded in March.The BSP said the majority of the registered investments or about 57 percent were in Philippine Stock Exchange (PSE) listed securities like banks, holding firms, transportation services, while 42.7 percent were invested in peso-denominated government securities. Less than one percent of the total inflows went to other financial instruments.The BSP said the top five investor countries for April were the United Kingdom, United States, Singapore, Luxembourg and Norway with a combined share of 84.1 percent.Meanwhile, the $1.1-billion gross outflows during the reference month was 19.7 percent lower than the $1.3 billion recorded in March with the United States receiving 70.9 percent of the total outward remittances, according to the BSP.“Year-on-year, registered investments in April 2023 are lower than the $2.2 billion recorded in April 2022 (by 68.0 percent or by $1.5 billion), while gross outflows are higher by 29.3 percent (or by $241 million) vis-à-vis the gross outflows recorded for April 2022 (823 million),” it said.“The $352-million net outflows in April 2023 are a reversal of the $1.4-billion net inflows recorded for the same period a year ago,” it added.Meanwhile, BSP data showed that year-to-date transactions for short-term investments yielded net outflows of $680 million, which is a reversal of the $1.4 billion net inflows recorded in the January-to-April period of last year.Hot money investments or foreign investments registered with the BSP through AABs included Philippine Stock Exchange-listed securities and peso-denominated government securities.The list also included peso time deposits with banks with minimum tenor of 90 days; other Peso debt instruments; unit investment trust funds; and other instruments such as Exchange Traded Funds and Philippine Depositary Receipts.The registration of inward foreign investments delegated to AABs by the BSP is optional under the rules on foreign exchange (FX) transactions.It is required only if the investor or its representative will purchase FX from AABs and/or their subsidiary/affiliate foreign exchange corporations for repatriation of capital and remittance of earnings that accrue on the registered investment.Without such registration, the foreign investor can still repatriate capital and remit earnings on its investment, but the FX will have to be sourced outside the banking system.

Image credits: Ed Davad