In just 13 months, the Philippine Stock Exchange index has fallen 25 percent, driving a sharp de-rating that now leaves the equity market trading at the weakest in the region, amid an ongoing earnings slowdown and broader economic and political headwinds.
Near-term volatility will persist and may even rise amid ongoing corruption investigations and related allegations, but this creates an excellent opportunity to accumulate quality names at deep discounts with significant upside potential, a Malaysian brokerage firm unit said.
With valuations now highly attractive and most negatives largely priced in, MayBank Securities sees a compelling entry point for Philippine stocks price recovery.
Expected policy rate cuts should support yield-sensitive sectors such as Real Estate Investment Trusts (REITs), telcos and utilities, while the government’s pivot in spending from infrastructure towards social subsidies or “ayuda” is likely to act as a key catalyst for consumer staples recovery.
The “Magic 8” top picks of MayBank are International Container Terminal Services Inc., SM Properties Holding, SM, Jollibee Food Corp., Puregold, Century Pacific Foods Inc., Cebu Pacific Air and Banco de Oro.
Maybank pointed to ICTSI as a standout in the third quarter earnings season, with net income surging 26 percent from a year ago, driven by strong volume growth across various regions, underscoring robust trade expansion outside North America — even as only a small portion of earnings is derived from the Philippines.
REITs are making a splash largely on the back of sponsor asset infusions, delivering a 26-percent earnings increase from 2024.
With sponsors maintaining a solid pipeline of investment properties for future injection and yields remaining attractive, REITs are poised to sustain their strong performance over the next 12 months.