Philippine stock market seen to bounce back this year

The Philippine stock market is likely to bounce back this year, amid easing inflation and further rate cuts by the central bank, analysts said.

“It is the first time in two years that we’re bullish on this market,” First Metro Securities Brokerage Corp. First Vice-President and Equity Research Division Head Reuben Mark Angeles said during the BusinessWorld Insights: Stock Market 2025 forum on Wednesday.

“For the last two years, we’ve been very bearish. And we see a lot of things that have turned around. And we see that at the end of the year, we will see stronger equity market performance.”

Mr. Angeles said PSEi is expected to hit the 7,600 level by yearend.

The PSE index (PSEi) closed 2024 at 6,528.79, up by 1.2% from its 6,450.04 finish in 2023. This marked the first time the bellwether index closed higher since 2019.

He noted the Philippine economy is on a “clear growth path,” with the midterm elections and favorable base effects to stimulate consumption this year.

April Lynn C. Lee-Tan, first vice-president and corporate strategy and chief investor relations officer of COL Financial Group, Inc., said there would be more opportunities for growth in the stock market, especially if foreign investments come in.

“We have a general positive outlook because of cheap valuation. The trends last year were high interest rates, high inflation, which are no longer the case now,” Ms. Lee-Tan told BusinessWorld on the sidelines of the forum.

Michael Gerard D. Enriquez, president of Sun Life Investment Management and Trust Corp., gave a moderate projection of 7,500 for the PSEi, which depends on further rate cuts, resilient corporate earnings growth and inflation is maintained at current levels.

He gave a conservative estimate of 6,608 for the PSEi if there are fewer-than-expected rate cuts, a weaker peso and heightened geopolitical tensions.

He said his “aggressive” outlook of 8,512 for the PSEi could materialize if the local currency starts to recover, the central bank implements more rate cuts and if there is renewed foreign interest in Philippine equities.

The Bangko Sentral ng Pilipinas (BSP) surprised markets after it left the benchmark rate unchanged at 5.75% at its Feb. 13 meeting. This after the central bank cut rates at three straight meetings since it began its easing cycle in August.

BSP Governor Eli M. Remolona Jr. has said the Monetary Board may slash benchmark interest rates by a total of 50 basis points (bps) this year as “policy insurance” against risks, with the cuts likely to be done in 25-bp increments each in the first and second half.

Ms. Lee-Tan said that the Philippines is less vulnerable to the US President Donald J. Trump’s tariff threats, as the country only accounts for 1% of US imports. She also noted the country is driven mainly by consumption, making it less affected by Mr. Trump’s protectionist policies.

Mr. Trump has announced this month its plans to impose tariffs on auto, chip, and pharmaceutical imports over the course of the year.

The US President has also tightened immigration policies, which may affect remittances of overseas Filipinos workers (OFW). Around 40% of remittances are from the OFWs in the US.

Mr. Angeles noted that investor confidence may be negatively impacted if remittances are significantly affected.

Unicapital Inc. Senior Vice-President for Investment Banking Pamela Louise Q. Victoriano said she sees the PSEi ending at the 7,800 level by yearend.

“Opportunities continue to persist. We are cautiously optimistic, we feel that the fundamentals for the Philippines are still there, and this represents good long-term growth prospects for the country,” Ms. Victoriano said.

BDO Securities Corp. Head Trader Jasper M. Jimenez said investors should diversify their portfolios but should favor stock market investments.

“Investors’ portfolios have to adapt to the changing market conditions. The stock market today is very different from before, we see a very fast appreciation due to market reasons. In terms of size, they can take advantage of this,” Mr. Jimenez said.

Analysts also noted that market reforms, such as the proposed reduction of sales transaction tax, are expected to boost stock market activity.

Mr. Angeles said European funds are likely to go back to the local stock market after the Philippines’ recent exit from the Financial Action Task Force’s “gray list.” – Ashley Erika O. Jose, Reporter