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March 02, 2024

Speculative funds exit Philippines in Q1 amid US Fed hike, Russia-Ukraine war

Speculative funds were pulled out from the Philippines as investors searched for better yields after the US Federal Reserve started hiking interest rates last month, while Russia’s invasion of Ukraine continued.

Statistics released by the Bangko Sentral ng Pilipinas (BSP) showed the country’s foreign portfolio investments yielded a net outflow of $16.44 million in the first quarter of the year despite the net inflows recorded in January and February.

However, the pull out of hot money from the country was 96.6 percent lower than the $483.49 million net outflow recorded in the same quarter last year.

The central bank said gross inflows of foreign portfolio investments went down by 5.1 percent to $2.95 billion from $3.11 billion, while gross outflows of speculative funds declined by 17.4 percent to $2.97 billion from $3.59 billion.

For the month of March alone, the Philippines recorded a net outflow of $305.08 million or 44 percent lower than the $540.97 million pulled out in the same month last year.

This was the highest outflow since July last year.

Data showed gross hot money inflows coming from the United Kingdom, US, Luxemburg, Singapore, and Hong Kong jumped by 55 percent to $1.28 billion in March from $824.23 million in the same month last year.

About 86.7 percent of the total amount went to PSE-listed securities, while the balance of 13.3 percent were invested in peso government securities.

On the other hand, gross outflows rose by 15.9 percent to $1.58 billion from $1.36 billion.

The BSP expects foreign portfolio investments bouncing back strongly with a net inflow of $4 billion for 2022 and $6.7 billion in 2023.

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