Foreign funds exited PH markets in january ’26
The Philippine capital market suffered an exodus of short-term foreign funds in January, signaling weakened investor confidence amid an unresolved corruption scandal that has continued to weigh on economic activity.
Data from the Bangko Sentral ng Pilipinas showed that outflows from foreign portfolio investment (FPI) transactions registered with the central bank exceeded inflows by $1.13 billion during the month.
The net outflow was nearly four times larger than the $284 million recorded in the same period a year earlier, though it remained smaller than the $2.4 billion in net outflows posted in December.
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 be longer-term and more closely tied to job creation.
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 were imposed by US President Donald Trump.
By type of instrument, government securities—including Treasury bonds and Treasury bills—posted a net outflow of $966 million.
Data from the Bureau of the Treasury showed the weighted average rate on Treasury bills eased month-on-month in January, although Treasury bond yields rose, suggesting that foreign investors may have demanded a higher risk premium.
The local equities market also saw an exodus of hot money, though the net outflow was milder at $168 million. The benchmark index closed January at 6,328.97, up 4.6 percent from December.
The Philippine Stock Exchange attributed the gain to benign inflation, expectations of further policy rate cuts by the BSP and the peso’s strengthening toward the end of the month.
Looking ahead, the central bank expects total FPIs—including transactions not registered with the BSP—to post a net inflow of $5.6 billion in 2026.
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.
