Foreign portfolio investments (FPI), or “hot money,” flowing into the Philippines staged a strong recovery in 2024, but still fell short of the central bank’s target, underscoring the volatility of these flows.
Net FPI inflows reached $2.1 billion last year, reversing the $248.84 million in net outflows in 2023, the Bangko Sentral ng Pilipinas (BSP) said. However, this was well below the BSP’s $6.3 billion projection.
Hot money, which moves quickly in and out of markets, is invested in instruments like stocks and government securities. The 2024 rebound suggests improved investor sentiment, likely driven by easing global inflation and stronger domestic economic activity.
In December alone, the Philippines saw net FPI outflows of $487.37 million, compared with $205.18 million in outflows in the same month of 2023. Despite the December outflow, inflows for the month totaled $1.055 billion, mainly from the UK, U.S., Singapore, Germany, and Ireland.
Last year, $3 billion in hot money flowed into peso-denominated government securities, up sharply from $781.08 million in 2023, reflecting a preference for safer assets. Conversely, the stock market saw net outflows of $897.53 million, though this was less than the $1.02 billion outflow in 2023.
Total foreign investments registered with the BSP rose to $17.932 billion in 2024 from $12.886 billion the previous year. Gross outflows, however, also increased to $15.829 billion from $13.135 billion, with a significant portion going to the United States.
The BSP has forecast $3.1 billion in net FPI inflows for 2025, citing moderating global inflation, increased business activity, and a favorable investment climate, while acknowledging risks from global uncertainties.
