By Luisa Maria Jacinta C. Jocson, Reporter
MORE SHORT-TERM foreign investments flowed into the Philippines in November, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Transactions on foreign investments registered with the central bank through authorized banks posted a net inflow of $96.59 million, a turnaround from the $529.68-million outflow in October.
However, the net inflows fell by 85.6% from the $671.77-million inflow posted a year ago.
These foreign portfolio investments are also called “hot money” due to the ease by which these funds enter and leave the economy.
BSP data showed gross inflows jumped by 18.2% to $1.86 billion in November from $1.57 billion in the same month a year ago.
During the month, investment inflows came mostly from the United Kingdom, Singapore, the United States, Luxembourg and Norway. These economies accounted for 90% of foreign portfolio investment inflows.
The bulk (71.4%) of these investments went into peso government securities while the rest (28.6%) went to Philippine Stock Exchange-listed securities of banks; holding firms; property; transportation services; and food, beverage and tobacco.
Meanwhile, gross outflows of hot money nearly doubled to $1.76 billion in November from $903.1 million a year earlier.
“The US remains to be the top destination of outflows, receiving $914.2 million (or 51.8%) of total outward remittances,” the central bank said.
In the January-to-November period, BSP-registered foreign investments yielded a net inflow of $2.59 billion, a turnaround from the $43.66-million net outflow in the same period a year prior.
Gross net inflows stood at $16.88 billion, while net outflows amounted to $14.29 billion in the 11-month period.
“The data improved month on month after tensions eased between Iran and Israel after Iran’s second missile attack on Israel this year on Oct. 1, but there was no retaliation from Israel so far,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
However, he noted that various political events weighed on markets during the month.
“The Trump factor was still the major catalyst for the local and global markets in November, after Trump won the US presidential elections on Nov. 5,” Mr. Ricafort said.
“Possible higher US import tariffs and trade war could slow down global trade and global economic growth, similar to the first Trump administration.”
Markets have been pricing in the impact of Mr. Trump’s proposed policies on the Philippines, which heavily relies on the United States for business and economic activity.
His proposals include a hike in import tariffs on Asian economies, as well as stricter immigration measures. The US President-elect is set to take office on Jan. 20.
“Political noises locally since late October 2024 also partly weighed on market sentiment.” Mr. Ricafort added.
For the coming months, this could be offset by possible rate cuts from the BSP and the US Federal Reserve.
The BSP has delivered a total of 75 basis points (bps) worth of rate cuts this year, bringing the benchmark to 5.75%.
BSP Governor Eli M. Remolona, Jr. has signaled further easing but noted that delivering 100 bps worth of rate cuts in 2025 might be “too much.”
The central bank will likely keep reducing rates in “baby steps” as it is still carefully monitoring upside risks to inflation, the BSP chief added.
Mr. Ricafort also noted the recent upgrade in the country’s credit rating outlook.
In late November, S&P Global Ratings affirmed the Philippines’ investment grade rating on Tuesday and raised its outlook to “positive” from “stable,” reflecting the economy’s strong growth potential.
The BSP expects foreign portfolio investments to yield a net inflow of $4.2 billion this year.
