Ongoing political controversies and corruption investigations are weighing heavily on investor sentiment and pulling down the local stock market, according to Philippine Stock Exchange (PSE) President and CEO Ramon Monzon.

Monzon attributed the recent downtrend in the local benchmark index to eroding investor confidence stemming from the flood control scandal, which has also shaken up the government as some officials were linked to the anomaly.

“It's the political scenarios happening here, the corruption scandal, the investigations. So what's happening to our market basically is really, it's a sentiment issue,” Monzon said in a Bloomberg interview on Monday (Manila time).

The PSE index on 29 September stood at 5,997.6, down 0.49 percent—a decline occurring nearly six months after it ended at 5,822.85 on 7 April.

Despite the current market slide, Monzon emphasized that the country’s economic fundamentals remain solid, citing strong corporate earnings and the positive impact of a new tax reform law.

“Earnings for index companies are up, with almost 17 percent for the first half,” he said.“The CIMEPA law, which reduced the stock transaction tax from 60 bps to 10 bps, was passed and was made effective [in] July. And in [July] we saw an increase in our volume,” he added, noting that trading volume rose 30.4 percent compared to the 2024 average daily volume.

Moreover, foreign investor activity has been volatile. Monzon noted that the country recorded net foreign selling of ₱23.2 billion in 2024, though there was a brief uptick in July, with net foreign buying of ₱1.6 billion.

“After the corruption scandal erupted, this reverted back to net foreign selling for August and September. That's what's confronting our market now,” he said.

‘Not all is gloom and doom’

Monzon stressed that the outlook isn't entirely bleak:

“Not all is gloom and doom,” he said. “There's some, well, there's still some bright spots that we look forward to. But the most important thing is we've got to get over this problem on the corruption scandal.”

As of 11:30 a.m., the benchmark index stood at 6,054.97, down 53.89 points or 0.88 percent.