Philippine stocks dead last amid corruption fallout

The Philippine Stock Exchange Index (PSEi) closed 2025 at 6,052.92, down 475.87 points from end-2024 — a 7.29 percent year-on-year decline. This marked the lowest year-end finish since 2013, underscoring persistent investor anxiety amid widespread corruption allegations confronting the administration of President Ferdinand R. Marcos Jr. The performance also left the Philippines dead last among regional equity markets for the year.

Asian stock markets broadly delivered strong gains in 2025, led by technology-heavy and export-oriented economies. South Korea’s KOSPI emerged as one of the world’s top-performing indices, surging 74.4 percent on a powerful rally in semiconductor and artificial intelligence-related stocks as global demand for memory chips and advanced electronics accelerated.

Japan’s Nikkei 225 rose 24 percent, supported by solid corporate earnings, robust foreign inflows, and a weaker yen that boosted exporters and pushed the index to multi-year highs.

Elsewhere, Hong Kong’s Hang Seng Index rebounded sharply after years of underperformance, while major indices in mainland China posted moderate gains on policy support and stabilizing growth. Taiwan and Singapore also ended the year higher, reflecting broad regional strength.

The Philippine market told a starkly different story. Instead of rebounding, the PSEi snapped a three-year streak of gains as investor confidence deteriorated following revelations tied to the now-infamous flood control scandal. The market had been on track for a midyear recovery, buoyed by low inflation and the first policy rate cut by the Bangko Sentral ng Pilipinas (BSP), finishing the first half at 6,364.94.

That momentum unraveled in late July, after the President publicly flagged anomalous infrastructure projects nationwide. Public infrastructure spending subsequently contracted by 26.1 percent in the third quarter, while gross domestic product (GDP) growth slowed to 4.0 percent. The PSEi fell below the 6,000 level and later plunged to 5,584.35 — its lowest since the COVID-19 market turmoil of 2020 — after fugitive former congressman Zaldy Co alleged that the President himself masterminded some P100 billion in budget insertions.

As investigations into alleged corruption continue, policymakers are banking on monetary support to revive growth. The BSP cut its key policy rate again in December to stimulate economic activity. Still, confidence remains fragile.

Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael Ricafort said restoring investor trust hinges on governance reforms.

“Some progress on the judicial process related to the anomalous flood-control infrastructure projects—such as arrests, cases filed, asset freezes, and priority legislation to strengthen anti-corruption measures and governance standards—are steps in the right direction and could eventually bear fruit if taken seriously,” he said.

Ricafort added that capital markets could rebound in 2026 “if anti-corruption measures, reforms, and policy priorities to further improve governance standards are taken seriously, as these remain the missing link to boost investor confidence in the economy and financial markets.”