The Philippine Stock Exchange Composite Index (PSEi) has been one of Asia’s worst performers year to date, down 4 percent. From an ASEAN perspective, the PSEi is trading at the lowest versus peers, making it one of the cheapest in the world.
There lies the opportunity, according to traders. Despite facing headwinds such as bad weather, corruption in flood control projects, political conflict, and low foreign direct investments (FDI), the economy is still growing above five percent.
Domestic consumption growth remains robust, fueled by sustained overseas Filipino workers’ (OFW) remittances and business process outsourcing (BPO) growth, according to Maybank International research.
As a result, corporate earnings are still expected to grow. Conglomerates are trading at a good discount to their respective real-time net asset values (NAV).
Maybank’s report indicated that corruption in flood control projects has been front and center in the Philippines, dragging investor sentiment lower.
However, even before these issues, the Philippines had been underperforming its peers due to decelerating growth, a weak currency, and low liquidity.
The catalysts would be addressing these issues. For instance, the government has moved to boost stock market liquidity by reducing transaction taxes.
“We could expect growth to accelerate in 2026 onwards as we see the impact of the rate cuts in the past 12 months materialize,” the global investment bank said.
Buy low, sell high is always the strategy of serious investors. If the current situation points toward resolution, capital will again start queuing in the market.