The weaker outlook for the domestic economy due to the Middle East crisis remains a significant headwind for the Philippine Stock Exchange (PSE) as it heads into the second half of 2026, according to PSE President and Chief Executive Officer Ramon S. Monzon.

Speaking to reporters via Zoom on Saturday, Monzon said the recent downgrade of the country’s gross domestic product (GDP) growth target by the Development Budget Coordination Committee (DBCC), as well as rising inflation and a weaker peso — all stemming from the Middle East conflict — may discourage foreign investors.

“These are all disincentives to foreign investors,” he said.

“By the time they liquidate their investment, they will [receive less] dollars in exchange for their peso investments.”

The DBCC recently revised its GDP growth target range for 2026 to 3.5 percent to 4.5 percent from 6 percent to 7 percent previously, citing the broad effects of the Middle East conflict. Economic growth slowed to 2.8 percent in the first quarter, which government officials attributed to the energy shock compounded by the lingering effects of the flood control scandal.

Several international institutions have likewise downgraded their outlooks for Philippine economic growth, which Monzon said poses a significant challenge not only for the economy but also for the country’s equity market.

“We were always on the high six to seven, five to six [percent annual growth range]. But now, even our own government has reduced its projection of our GDP to between three and a half and four and a half percent for 2026,” he said.

Monzon added that rising inflation — which reached a three-year high in April — and a depreciating peso, which has hit record lows 11 times since the Gulf conflict escalated in March, further reduce the incentive for foreign participation in the local bourse.

Despite these headwinds, Monzon remains bullish on the PSE’s performance in the second half of the year, noting that the value of capital-raising applications received so far has already exceeded the exchange’s P170 billion target for 2026.

“[O]ur projected capital raising for 2026, as of this date, based on the applications that we have received, is about P204 billion. So we exceeded our optimistic target of P170 billion that we gave at the beginning of the year. And that’s a very good sign for the exchange,” he said.

The PSE is anticipating two major initial public offerings (IPOs) this year, with an additional five potential IPOs lined up for 2027.