July brought a net inflow of just $66.47 million, down
July brought a net inflow of just $66.47 million, down 91% from a year earlier. The cumulative position remains deeply negative after heavy withdrawals earlier in 2026.

Foreign portfolio investment in the Philippines has improved month by month but remains deeply in deficit for the year. Both trends were highlighted in the same Bangko Sentral ng Pilipinas release.

Registered foreign portfolio investments — commonly known as hot money — posted a net inflow of $66.47 million in July, sharply below the $742.56 million recorded in the same month last year and 60.9% lower than June's $170.12 million.

It was nevertheless the third consecutive month of net inflows.

The cumulative picture is far less positive. From January to July, registered foreign investments recorded a net outflow of $3.94 billion, reversing a net inflow of roughly $2.25 billion during the same period in 2025.

The composition

The monthly figures show why the net result has narrowed to almost zero.

Gross inflows fell 4.1% year on year to $2.37 billion in July and were down 19.5% from June's $2.94 billion. Gross outflows rose 33.2% year on year to $2.3 billion, although they were 17% lower than June's $2.77 billion.

In other words, the money leaving the country nearly matched the money coming in. By instrument, securities listed on the Philippine Stock Exchange recorded a net inflow of $86 million, while government securities posted a net outflow of $20 million.

Union Bank chief economist Ruben Carlo Asuncion said the reversal reflected greater caution among foreign investors toward riskier emerging-market assets amid heightened global uncertainty. Overall withdrawals have outweighed new placements this year, he said.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., took a longer-term view, saying the Philippines remains fundamentally attractive. Portfolio flows, however, will continue to fluctuate with global risk appetite, while the country's macroeconomic story remains intact.

The broader context

The flows data comes as other Philippine indicators have also turned against the country.

The peso closed at a record low of 62.265 to the dollar on 28 August, breaching 62 for the first time. MUFG described it as Asia's worst-performing currency of the week. The central bank raised its policy rate to 5% the previous day, marking a third consecutive increase. The balance of payments swung to a $1.47 billion deficit in July from a $3.4 billion surplus in June, with the BSP citing the continuing trade-in-goods deficit and net outflows from foreign portfolio investments among the causes.

Hot money is the most mobile component of that picture. It responds to interest-rate differentials and risk appetite more quickly than trade or remittance flows, making it an early rather than lagging indicator.

The BSP projects foreign portfolio investments to post a net inflow of $1.8 billion for the full year, compared with an estimated $3.7 billion in 2025. Achieving that target would require a substantial reversal over the remaining five months.

What to watch

The first question is whether the run of net inflows continues into August. That would provide the clearest signal of whether investor sentiment has turned.

The second is the interest-rate differential. The BSP has tightened monetary policy by 75 basis points since April, which should support inflows. July's near-zero net figure suggests that support has not yet materialised.

The third is the full-year projection. Moving from a $3.94 billion deficit to a $1.8 billion net inflow would require nearly $5.7 billion in net inflows over five months.

Originally published on ibtimes.com.ph