By Jomarc Angelo M. Corpuz, Special Features and Content Writer
The Philippine Stock Exchange (PSE) has been on a downtrend since peaking at a little over 9,000 points in 2018. Despite periodic rebounds, the index has struggled to regain its previous highs due to global economic uncertainties, inflationary pressures, and the impact of the COVID-19 pandemic. For the first time in years, optimism is building around the PSE, with experts seeing potential for recovery and growth despite past challenges.
At such a background, a BusinessWorld Insights forum, held last Feb. 26 in Dusit Thani Manila, probed the Philippines’ stock market performance in recent years to discover the reasons and factors for the said outcomes.
The forum was graced by Department of Finance (DoF) Assistant Secretary Neil Adrian S. Cabiles, who delivered a keynote address on “Strengthening Market Resilience in the Pursuit of Growth in 2025.”
During his speech, Mr. Cabiles highlighted the Philippines’ strong economic performance under President Ferdinand R. Marcos, Jr., improvements in several indicators, the implementation of key reforms, as well as the department’s growth expectations for the country both regionally and globally in 2025.
The assistant secretary revealed that the Philippines remained as one of the best-performing economies in the world, expanding by an average of 6% ever since Mr. Marcos took office. This growth rate ranks second in the ASEAN region, third in Asia, and eighth globally. Mr. Cabiles noted that the economic development can be attributed to public and private construction, household and government consumption, along with activities in the manufacturing, services, and transportation sectors.
He also discussed how inflation has eased after consecutive years of elevated levels. According to data from the DoF, inflation in 2022 reached 5.82% and further increased in 2023 to 5.98%. Last year, the rate returned within the target range of 2%-4%, decreasing to 3.2%.
Additionally, investments both from the government and private sectors are expected to drive growth in 2025 as well. Along with continued monetary leasing, Mr. Cabiles said that investors are taking advantage of reforms from the DoF, such as incentive packages and liberalization on public services, renewable energy, and retail trade. Timely and efficient implementations of the National Budget and flagship infrastructure projects are also viewed as potential growth drivers this year.
Similarly, Mr. Cabiles called the Philippine labor market as “one of the good stories” of the economy in 2024. Last year, unemployment and underemployment rates showed marked improvements compared to 2023 and pre-pandemic levels. He explained that these numbers reflect improved job quality, success of reskilling and upskilling workers, and enhanced labor policies.
Other positive economic indicators touched on by Mr. Cabiles include the resurgence of international tourism, the contributions of the business process outsourcing sector, prudent debt management, strong fiscal external position, and significant improvements in the inflows of foreign direct investments.
Resilience amid risks
However, while these positive developments paint an encouraging outlook for 2025, Mr. Cabiles also underscored the potential risks and challenges that could hinder sustained economic growth. He advised policy makers and investors to remain cognizant of global uncertainties such as the impact of the United States’ (US) policies, external inflationary pressures, continued geopolitical tensions, and increasing trade protectionism.
Given these key concerns, Mr. Cabiles noted that introducing reforms to the ecosystem for investments, both physical and financial, are of great value. Chief among these is the CREATE MORE Act, which enhances tax incentives, improves the ease of doing business, clarifies VAT rules, and reduces administrative burdens for investors.
To end his address, Mr. Cabiles briefly spoke about the much-awaited reclassification of the Philippines to upper middle-income status. According to him, the common diagnosis of a number of studies shows that the country is on track, but subject to, among others, a sustained growth trajectory, implementing policy reforms, a favorable economic environment, and meeting key investments.
“We, as part of the public sector, are committed to meeting these pre-conditions, and we strive to maintain growth and lay down the essential infrastructure to support these. We have and also continue to institute the necessary reforms to foster an enabling environment for more investments,” Mr. Cabiles concluded.
Cautious optimism
During the forum’s first panel discussion, experts from COL Financial Group, Sun Life Investment Management and Trust Corp. (SLIMTC), and First Metro Securities Brokerage Corp. (FirstMetroSec) shared their insights on the realities facing the stock market this year.
L-R: Sun Life Investment Management and Trust Corp. President Michael Gerard D. Enriquez, COL Financial Group Corporate Strategy and Chief Investors Relation Officer April Lyn C. Lee-Tan, First Metro Securities Brokerage Corp. FVP and Equity Research Division Head Reuben Mark Angeles, and Cignal TV News Anchor Dr. Danie Laurel (moderator and forum host) — Photo by Jayson John Mariñas
The conversation panelled by COL Financial Group’s Corporate Strategy and Chief Investors Relation Officer April Lyn C. Lee-Tan, SLIMTC President Michael Gerard D. Enriquez, and FirstMetroSec FVP and Equity Research Division Head Reuben Mark Angeles focused on the Philippine stock market’s underperformance in 2024 and the reasons for their cautious optimism this year.
Ms. Lee-Tan looked beneath the surface of the underperformance of last year’s stock market. Mr. Enriquez shared how he projects the PSE moving forward this year, while Mr. Angeles explained why he is bullish for the first time in two years for 2025’s market.
One key issue raised during the discussion was the impact of trade protectionism, particularly under the policies of US President Donald Trump. With concerns mounting over how restrictions on global trade and investment could affect emerging markets like the Philippines, Ms. Lee-Tan noted that despite initial fears, the country managed to navigate the first Trump presidency without severe disruptions.
“There’s reason to believe that what we’re seeing today is an overreaction to what would happen because of Trump’s presidency,” she said. “It’s a very interesting first month for the administration as the Department of Government Efficiency (DOGE) has been quite aggressive in cutting costs. If they are successful, that would be deflationary and that would mean short-term pain for long-term gains.”
Foreign funds weighed in
The discussion also shifted to another pressing concern — the exodus of foreign funds from the Philippine market. Mr. Angeles believes that there will be a rotation eventually which will allow foreign funds to flow back to the country. He believes that investors will slowly look for opportunities in countries that have less exposure or are less vulnerable to policies by the Trump administration.
“I think for us, we need to demonstrate that we have that underlying theme for the Philippines, not just strong fundamentals. We all know that clearly, fundamentals are not reflective of the equity market levels right now. So, it’s that underlying theme: What would make me buy the Philippines again, compared to other countries?” Mr. Enriquez added.
With global markets closely monitoring central bank policies, the discussion shifted to the Bangko Sentral ng Pilipinas (BSP) and the potential impact of reducing interest rates. Mr. Enriquez believes that the BSP will cut 50 basis points on the reserve requirement ratios, which will be beneficial to banks and free up liquidity in the system. He also mentioned the importance of the strength of the dollar as the PSE index is highly dependent on foreign funds.
“I think we’re the only market that is heavily reliant on foreign funds. That’s why we’ve been talking about, when will foreign funds come in, and it’s more than 50% [of the market] right now. I think it might be much less as local fund managers have taken over the volume, but it’s that dynamics,” Mr. Enriquez said.
More investor participation
Encouraging Filipinos to invest more was also a topic for discussion in the panel. Experts stressed the importance of increasing local investor participation to reduce dependence on foreign funds and create a more stable market.
“It’s all about investment education, trying to encourage them. But again, the problem is, you have other options. It’s still about the market at the moment, unless we see yields come down to a level that maybe [Filipinos] can get more gains in the market,” Mr. Angeles explained.
As investors weigh their options in the PSE, the discussion naturally turned to the upside and downside risks that could shape the stock market’s trajectory in 2025. For Mr. Enriquez, if the market continued at its current level, the market will settle on their conservative projection of 6,608. Meanwhile, for the PSE to reach his upside projection of 8,512, he encouraged investors to look at the US Tenure Bond and the dollar.
The Philippine stock market’s road to recovery has both opportunities and challenges for investors and policy makers alike. While optimism is building, experts from the panel remind investors to stay cautious, considering factors like global trade policies, foreign fund movements, and interest rate adjustments. As 2025 unfolds, it’s all about striking the right balance and making the right decisions — seizing opportunities while staying prepared for the risks ahead.
This BusinessWorld Insights forum was supported by silver sponsors BDO Capital, SM Investments Corp., and Sun Life; bronze sponsors Figaro Coffee Group, Meralco, SM Supermalls, Unicapital Group; partners Asian Consulting Group, American Chamber of Commerce of the Philippines, British Chamber of Commerce of the Philippines, Bank Marketing Association of the Philippines, CCI France Philippines, Management Association of the Philippines, Philippine Chamber of Commerce and Industry, Philippine Franchise Association, and Philippine Retailers Association; and official media partner The Philippine STAR.
