Amid confidence crisis, PH ‘hot money’ tally shrank in 2025
The Philippine capital markets drew a smaller net inflow of fickle foreign funds in 2025, closing a turbulent year shaped by global trade tensions and domestic governance concerns.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that inflows from foreign portfolio investment (FPI) transactions registered with the central bank had beaten outflows by $1.62 billion for the year. However, the amount was nearly 23 percent lower than the net amount of foreign money invested in liquid instruments like stocks and bonds in 2024.
The year 2025 ended on a sour note. In December, foreign investors pulled out a net amount of $2.36 billion, reversing two consecutive months of net gains and underscoring the volatility that defined the market.
Such investments, often referred to as “hot money,” are prone to swift reversals at the first sign of unfavorable conditions. These funds are far more sensitive to shifts in domestic and global sentiment than foreign direct investments, which tend to be longer-term and more closely tied to job creation.
By type of instrument, government securities like Treasury bonds and Treasury bills posted a net inflow of $3.72 billion last year, as the state took advantage of lower interest rates amid the easing cycle of the central bank.
That helped offset the $2.1 billion net outflow seen in the local equities market, which was battered by a dangerous mix of global trade uncertainties, sluggish economic growth and domestic governance concerns.
The local stock market, which was among the world’s most unloved bourses in 2025, saw its main index decline by more than 7 percent last year.
Last year, President Marcos ordered an investigation into anomalous flood control projects, a scandal that ensnared lawmakers, Cabinet members and government engineers. The probe rattled business and consumer confidence. It also slowed public spending, dragging on economic activity.
Those domestic strains were compounded by lingering global trade uncertainty after reciprocal tariffs imposed by President Donald Trump of the United States disrupted trade flows and fueled sharp volatility in financial markets worldwide last year.
Looking ahead, the central bank expects total FPIs—including transactions not registered with the BSP—to have posted a net inflow of $8.1 billion in 2025, up from 2024’s $5.7 billion. To note, registration of inbound portfolio flows is optional and applies only to investors who purchase foreign exchange from local banks when moving their funds.
But for this year, the BSP said total hot money net inflow may ease to $5.6 billion due to “cautious market sentiment and heightened global financial volatility.”
