In November 2024, the Philippines recorded net inflows of 'hot money' amounting to $96.59 million, marking a significant recovery from the $529.68 million outflow seen in October. However, this figure represents an 85.6% decrease compared to the $671.77 million inflow in November 2023. The increase in gross inflows, which rose by 18.2% to $1.86 billion year-on-year, indicates a complex landscape for foreign investments in the country [ce0398b1].
Major sources of these investments included the UK, Singapore, the US, Luxembourg, and Norway, which collectively contributed to 90% of total inflows. Notably, 71.4% of these investments were directed towards peso government securities, reflecting a preference for stable assets amid global uncertainties [ce0398b1].
In contrast, gross outflows nearly doubled to $1.76 billion, with the US receiving $914.2 million, accounting for 51.8% of total outflows. For the January-November period, net inflows totaled $2.59 billion, a stark contrast to the $43.66 million net outflow recorded during the same timeframe last year. The Bangko Sentral ng Pilipinas (BSP) anticipates a net inflow of $4.2 billion for the year, suggesting optimism for the Philippine economy despite recent fluctuations [ce0398b1].
Political events, particularly the upcoming US presidential election on November 5, have influenced market sentiment, with potential implications for trade and economic growth in the Philippines. Investors are closely monitoring these developments, as they could impact the flow of foreign investments and overall economic stability in the region [ce0398b1].
This recovery in hot money inflows comes at a time when U.S. equity funds are also experiencing a resurgence, having attracted a net inflow of $20.56 billion in the week leading up to December 25, 2024. This shift in investor sentiment is largely attributed to cooler inflation data, with the PCE price index rising by only 0.1% in November, which was better than expected. This positive news has bolstered confidence in global markets [8d37bbfb].
Moreover, global equity funds saw inflows of $34.38 billion during the same week, following net sales of $36.84 billion the previous week. European and Asian funds also experienced inflows of $5.11 billion and $2.84 billion, respectively, indicating a broader recovery in global investment sentiment. However, global bond funds recorded net sales of $1.47 billion, with high yield bond funds experiencing the largest outflow in eight months at $2.99 billion [8d37bbfb].
As the global economic landscape continues to evolve, both the Philippines and the U.S. are navigating complex challenges and opportunities, with investors keenly watching for signs of stability and growth in these markets.