SHORT-TERM foreign investments turned negative in the first six months of the year, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Portfolio investments — also known as “hot money” because these can be moved quickly elsewhere to maximize profits from interest rates — reversed to a net outflow of $4.03 billion from the year-earlier net inflow of $1.95 billion.
Gross inflows for the six-month period hit $13.74 billion, up from the $12.65 billion recorded in the same period last year. Outflows, meanwhile, totaled at $17.74 billion, markedly higher than the $10.7 billion seen in January-June 2025.
Union Bank of the Philippines chief economist Ruben Carlo Asuncion said this reflected a more difficult external environment for emerging markets.
“Investors have generally been more cautious amid elevated global uncertainty, concerns over global growth, volatile financial market conditions, and ongoing geopolitical risks,” he said.
“As a result, foreign portfolio flows have remained highly mobile and prone to sudden shifts in sentiment.”
In June alone, net inflows were markedly higher at $170.12 million compared to the year-earlier $18.34 million, but fell from May’s $232.46 million.
“The positive net inflow in June suggests that foreign investors continued to see opportunities in Philippine financial assets despite a challenging global environment,” Asuncion said.
Gross inflows for the month rose to $2.94 billion from $1.94 billion in June last year and were also higher than the $1.74 billion in May.
Overall outflows totaled $2.77 billion, also higher than the $1.92 billion and $1.5 billion recorded a year and month earlier, respectively.
“Gross inflows rose significantly to a four-month high, indicating sustained investor interest in local equities and fixed-income instruments,” Asuncion said.
“At the same time, the country also saw a substantial increase in outflows, which likely reflected portfolio rebalancing, profit-taking, and heightened sensitivity to global developments, including geopolitical tensions and shifting interest rate expectations,” he added.
Asuncion expects portfolio flows to remain volatile and largely dependent on global risk appetite, US monetary policy developments and geopolitical conditions.
“The ongoing Middle East conflict, in particular, could continue to drive periods of risk aversion and encourage flows toward safe-haven assets,” he said.
“Nonetheless, the Philippines remains supported by relatively sound macroeconomic fundamentals, steady economic growth, and an attractive domestic investment environment,” Asuncion continued.
“These factors should continue to provide some support for foreign investor interest, although periods of inflows and outflows are likely to alternate in the months ahead.”
