Philippine stock market suffers worst loss since pandemic amid trust crisis

The Philippine stock market has lost about P1.7 trillion in value over the past three weeks, as investor fears over corruption in flood control projects triggered a major sell-off despite strong corporate fundamentals. This marks the largest loss in absolute value since the COVID-19 pandemic in 2020, when market capitalization plunged by P1.16 trillion amid widespread uncertainty.

“This is not just a market issue. It’s a trust issue,” Securities and Exchange Commission (SEC) Chair Francis Lim said. “When trust breaks down, capital dries up, and everyone—government, business, and the public—pays the price.”

The current slump echoes past market downturns tied to political and economic crises that have shaped Philippine financial history.

Political turmoil and economic decline in the 1980s

In the early 1980s, the Marcos administration’s debt-driven spending and fiscal mismanagement sparked a debt crisis and surging inflation. Interest rates on government securities soared above 40 percent, draining liquidity and eroding investor confidence. Between 1980 and 1984, Philippine equities lost over half their real value.

Following the 1986 People Power Revolution, the stock market briefly rebounded, only to tumble again during the coup attempts of 1987 and 1989, which erased an estimated P80 billion in market value—equivalent to roughly P250 billion in today’s terms.

The 1997 and 2008 financial crises

The 1997 Asian Financial Crisis dealt another severe blow. Triggered by the devaluation of the Thai baht and regional contagion, the Philippine Stock Exchange (PSE) Composite Index fell by 41 percent, with market capitalization plunging from P2.1 trillion to P1.3 trillion—a loss of about P900 billion, or roughly P1.8 trillion in 2025 pesos. The crisis exposed the country’s vulnerability to external shocks and weak macroeconomic fundamentals.

The 2008 Global Financial Crisis led to an even sharper contraction. As major U.S. banks collapsed, global investors fled emerging markets. The PSE Index sank by nearly 48 percent from end-2007 to end-2008, wiping out an estimated P3.9 trillion in value—the largest single-year nominal loss in local market history. The downturn was fueled by collapsing exports and remittances, though Philippine banks remained relatively insulated from toxic assets.

The 2020 COVID-19 pandemic crash

During the 2020 COVID-19 pandemic, fears of economic shutdowns triggered one of the fastest market declines on record. On March 12, 2020, the Philippine Stock Exchange Index (PSEi) plunged 10.43 percent, and the market lost approximately P700 billion in capitalization. Trading was suspended multiple times after circuit breakers were activated, and market capitalization fell by P1.14 trillion within weeks. The collapse underscored how non-financial crises, such as health emergencies, can devastate markets through panic and uncertainty.

A crisis of confidence once more

Throughout history, Philippine stock market crashes have mirrored periods of political instability and economic stress, each triggering capital flight and signaling weakened investor confidence.

The current sell-off, fueled by corruption allegations in infrastructure spending, reflects similar underlying risks to institutional trust. As the government continues its investigations, regaining investor confidence will depend on transparency, accountability, and decisive reforms to prevent further erosion of market credibility.