Hot money returned to PH debt in May; stock selling slowed

MANILA, Philippines – Flighty foreign funds returned to government securities in May, while outflows from Philippine equities eased as investor sentiment improved after the United States and Iran stepped up diplomatic efforts following weeks of heightened tensions.

Data from the Bangko Sentral ng Pilipinas showed that foreign portfolio investment (FPI) inflows registered with the central bank had exceeded inflows by $232 million for the month, reversing two straight months of net withdrawals.

READ: ‘Hot money’ outflows eased in April as sentiment improved

Article continues after this advertisement

But it was 61-percent lower than the $601-million net inflow recorded a year ago.

FEATURED STORIES

BUSINESS

BUSINESS

BUSINESS

Such investments, often referred to as “hot money,” are prone to swift reversals at the first sign of unfavorable conditions.

These funds—often invested in liquid instruments like stocks and bonds—are far more sensitive to shifts in domestic and global sentiment than foreign direct investments, which tend to stay for longer term and are more closely tied to job creation.

By type of instrument, government securities—including Treasury bonds and Treasury bills—posted a net inflow of $338 million in May, a turnaround from the $1-billion net outflow in the preceding month. This, despite the benchmark yield for 10-year bonds staying above 7 percent during the month.

Tempered hopes

Meanwhile, local equities saw a hot money net outflow of $104 million, easing from April’s $545-million net outflow.

Article continues after this advertisement

The benchmark Philippine Stock Exchange Index ended the month of May at 5,768.76, down by over 1 percent from its April finish. While signs of a possible agreement between the US and Iran have emerged, analysts said recent military exchanges between the two sides have tempered hopes for a near-term peace deal.

READ: Before Iran war, hot money inflows on the rise

Article continues after this advertisement

Looking ahead, the central bank now expects total FPIs—including transactions not registered with the BSP—to post a net inflow of $1.8 billion in 2026, far lower than its previous estimate of $3.7 billion. The BSP said portfolio flows were expected to remain volatile and sensitive to global risk sentiment and financial conditions.

Although some recovery is anticipated in 2027—supported by improving global conditions and structural catalysts such as bond index inclusion and sectoral investment pipelines—the central bank said the rebound in inflows was likely to be gradual and uneven. INQ

Your subscription could not be saved. Please try again.

Your subscription has been successful.