Amid souring investor sentiment driven largely by the economic downturn linked to ongoing corruption issues hounding the administration of President Ferdinand R. Marcos Jr., the local bourse ended the year at its weakest level since 2013.

The PSEi entered 2025 already under pressure as foreign investors pared exposure to Philippine equities amid policy uncertainty, still-elevated interest rates, and a weakening peso, which eroded foreign returns and weighed heavily on index heavyweights such as banks and property stocks.

Global funds rotation

Market valuations had earlier priced in expectations of aggressive rate cuts, leaving equities vulnerable when the Bangko Sentral ng Pilipinas (BSP) signaled only gradual, data-dependent easing, even as global funds rotated toward higher-yielding U.S. assets and larger ASEAN markets.

Although the PSEi rebounded in the second quarter to 6,364.94 following the BSP’s first policy rate cut and manageable inflation, inconsistent foreign inflows and cautious corporate earnings outlooks prevented a sustained recovery to end-2024 levels.

Short-lived rebound

The rebound proved short-lived. The third quarter opened with President Marcos Jr.’s flagging of anomalous flood control projects during his State of the Nation Address in late July — widely viewed as the trigger for the broader economic slowdown.

Subsequent developments in the ongoing “Floodgate” saga dragged the market to near pandemic-era levels. Third-quarter gross domestic product (GDP) growth slowed sharply to 4.0 percent, while heightened currency volatility further dented investor confidence.

Intensified political risks

Political risks intensified on 14 November, as renewed attention on the Senate’s revived probe into the flood control scandal coincided with a surprise video exposé by former congressman Zaldy Co. The PSEi fell to 5,584.35, its lowest level in five years.

Despite a difficult year, the market showed signs of resilience toward yearend, buoyed by renewed bargain hunting.

The Philippine Stock Exchange (PSE) reported a 75.0 percent surge in total capital raised from primary and secondary share and warrant sales to P144.14 billion in 2025, up from P82.37 billion in 2024.

Two IPOs

The Exchange recorded two initial public offerings during the year: Top Line Business Development Corp. and Maynilad Water Services Inc. The latter raised P34.3 billion, the largest IPO since Monde Nissin’s 2021 listing, providing much-needed funding for water and wastewater infrastructure upgrades.

While the benchmark index declined, other market gauges outperformed. The PSE MidCap Index and PSE Dividend Yield Index rose by 20.17 percent and 2.37 percent, respectively, year on year.

Average daily value turnover climbed 20.10 percent to P7.33 billion, from P6.10 billion in 2024. However, total domestic market capitalization fell 6.29 percent to P13.65 trillion, from P14.57 trillion a year earlier.