By Katherine K. Chan, Reporter
THE PHILIPPINES continued to see short-term foreign investments exiting the country for a second straight month in April as investors remained cautious amid heightened global uncertainty, preliminary central bank data showed.
Transactions on foreign investments registered with the Bangko Sentral ng Pilipinas (BSP) through authorized agent banks yielded a net outflow of $1.601 billion in April, a reversal of the $857.12-million net inflow a yr earlier.
Nonetheless, this was lower than the $1.957-billion net outflow posted in March.
Foreign portfolio investments (FPI) are also known as “hot money” on account of the benefit with which these flows enter or leave the country.
Based on central bank data posted on its website, gross outflows of hot money ballooned by 89.63% yr on yr to $3.108 billion in April from $1.639 billion. Nonetheless, it was 17.78% lower than the $3.78-billion outflows within the previous month.
Alternatively, total hot money inflows amounted to $1.507 billion throughout the month, down by 39.62% from $2.496 billion a yr prior and by 17.33% from $1.823 billion in March.
Most or $1.056 billion of the outflows were recorded in investments in peso-denominated government securities, reversing from the $1.142-billion net inflow in April last yr.
Meanwhile, investments in Philippine Stock Exchange (PSE)-listed securities saw a net outflow of $545 million, larger than the $284-million outflow a yr ago.
More short-term foreign investments left the country in April as uncertainties stemming from global geopolitical tensions prompted investors to be more cautious, analysts said.
“April’s net outflow got here as investors turned more cautious amid geopolitical tensions, a powerful dollar, and uncertainty over global rates of interest,” SM Investments Corp. (SMIC) Group Economist Robert Dan J. Roces said in a Viber message.
“Foreign funds are likely to move quickly when risk sentiment shifts, and that’s what we saw,” he added.
The continued war within the Middle East, which erupted in late February, also continued to jolt domestic and global markets, which likely led to 2 straight months of hot money outflows, Rizal Business Banking Corp. Chief Economist Michael L. Ricafort noted.
“This is essentially on account of the second full month of the war on Iran/Middle East since Feb. 28 that increased global and native market volatility amid the sharp increase in global crude oil, fuel, and petroleum prices, higher inflation, and possible further central bank rate hikes,” he said via Viber.
Uncertainties surrounding the over three-month conflict between america and Iran proceed to fuel market volatility, pushing up inflation for major oil importers and weighing on currencies just like the Philippine peso because the US dollar strengthens on safe-haven demand.
In April, Philippine inflation quickened to its fastest pace in over three years at 7.2% from 4.1% in March as still high oil prices spilled over to costs of food and utilities.
Meanwhile, the peso touched the P61 mark for the primary time in April, plunging by 73.7 centavos to shut at P61.485 against the greenback on April 30 from its P60.748 finish on March 31.
The BSP has since shifted to a hawkish stance, with growing calls for further rate hikes to temper spiraling prices.
The Monetary Board tightened for the primary time in two-and-a-half years at its April meeting, raising the important thing policy rate by 25 basis points (bps) to 4.5%.
BSP Governor Eli M. Remolona, Jr. has said that they could keep using monetary policy to bring inflation back to their 2%-4% goal, with an off-cycle hike being considered before the Board’s next review on June 18.
April’s net outflow brought the country’s four-month hot money tally to a $4.407-billion net outflow. This likewise marked a reversal from the $923-million short-term foreign investments that entered the country in the identical period last yr.
Broken down, foreign investments in government securities posted a net outflow of $3.072 billion within the January-to-April period, reversing the $1.68-billion inflows seen a yr prior.
Meanwhile, hot money outflows in PSE-listed securities stood at $1.34 billion as of April, much higher than the $755-million outflows recorded within the previous yr.
“In the approaching months, flows may remain choppy, with periods of each inflows and outflows, depending on how global markets, the Fed, and the peso evolve,” said SMIC’s Mr. Roces.
The BSP projects FPIs to finish this yr at a net inflow of $3.7 billion, unchanged from the overall estimated net inflows in 2025.