MORE short-term foreign investments left the Philippines in March than flowed in, reflecting depreciating risk sentiment following the beginning of the US and Israel’s war with Iran, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Transactions on foreign investments registered with the central bank through authorized banks posted a net outflow of $1.957 billion in March, larger than the $110.43-million outflow in the identical month a 12 months ago, in keeping with preliminary data posted on the central bank’s website.
The March figure was the most important monthly net outflow since December’s $2.358 billion.
This was also a reversal of the $283.2-million net inflow recorded in February.
Foreign portfolio investments are also known as “hot money” as a result of the convenience with which these flows enter or leave the country.
Broken down, gross hot money outflows greater than doubled to $3.78 billion in March from $1.82 billion in the identical month last 12 months. This also surged by 37.15% from the $2.76 billion value of funds that exited the country in February.
Meanwhile, gross inflows went up by 6.49% to $1.82 billion from $1.71 billion in the identical month a 12 months prior. Month on month, placements sank from February’s $3.04 billion.
Investments in Philippine Stock Exchange-listed securities saw a net outflow value $653 million that month versus the $282-million outflow in March 2025, while those in peso-denominated government securities posted a $1.304-billion net outflow, reversing the $171-million net inflow in the identical month last 12 months.
From January until the primary week of April, foreign portfolio investments yielded a net outflow of $2.988 billion, a reversal of the $26.6-million net inflow in the identical period last 12 months, BSP data showed.
Gross outflows surged to $10.08 billion within the period versus $5.15 billion within the prior 12 months.
Meanwhile, inflows went as much as $7.09 billion from $5.176 billion.
The surge in hot money outflows in March was driven mainly by the Middle East war that began at the tip of February that rattled global markets, Rizal Business Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
This compounded earlier concerns that dented risk sentiment, including the US’ military strikes on Venezuela, US President Donald J. Trump’s attempts to purchase Greenland, and continued threats to the US Federal Reserve’s independence, he said.
After ending 2025 on the P58 range, the peso is now trading on the P61 level, with safe-haven demand for the greenback and inflation concerns as a result of the war shock causing regional currencies to weaken and in addition driving bond yields back up.
The Philippine Stock Exchange index has also dropped below the 6,000 mark in recent weeks after trading on the 6,400 level earlier this 12 months amid dimming prospects of an end to the Middle East conflict.
“The web outflow in March largely reflects profit taking and portfolio rebalancing following strong inflows in February, amid renewed caution over the timing of worldwide rate cuts and bouts of risk aversion,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
For the remainder of the 12 months, Mr. Ricafort said foreign portfolio investments may proceed to yield net outflows because the Middle East conflict continues to affect risk sentiment and dim global economic prospects, which is reflected in rising bond yields, the decline within the fundamental stock benchmark, and the peso’s weakness.
Still, the recent announcement of Philippine peso-denominated government bonds’ inclusion within the JPMorgan Chase & Co.’s Government Bond Index-Emerging Markets starting next 12 months could provide an upside, he said.
“Month-to-month swings in hot money are typically driven by global sentiment reasonably than domestic fundamentals, and we expect flows to stay two-way and volatile this 12 months as markets proceed to reassess US monetary policy and geopolitical risks,” Mr. Asuncion added.
The BSP expects foreign portfolio investments to yield a net inflow of $3.7 billion this 12 months, based on its latest balance of payments forecast. — A.M.C. Sy