PSEi rebound seen this year if governance issues resolved

By Alexandria Grace C. Magno

THE PHILIPPINE Stock Exchange’s (PSE) main index will most likely consolidate or move sideways this year amid continued uncertainty, according to analysts.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said as things stand today, the PSE index (PSEi) could go up to the 6,700 level if governance issues are resolved and gross domestic product (GDP) growth remains above 5%.

“There’s a chance that the market could rise to around 6,600-6,700 if we see decisive action on governance issues as well as a sustained trend of GDP growth above 5%,” he said in a Viber message. “Conversely, there’s a risk of the index revisiting 5,600 or lower if economic growth stalls or fresh governance concerns emerge.”

Economic managers expect 6-7% GDP growth this year, slightly faster than the 5.5-6.5% goal in 2025.

A corruption scandal involving anomalous flood control projects has already shaken investor confidence and slowed economic activity last year.

An independent commission is still investigating the allegations that government officials, lawmakers and contractors received billions of pesos in kickbacks from anomalous projects.

The flood control mess has affected the stock market, which slumped in 2025. The PSEi ended lower on Monday — the final trading day of 2025 — at 6,052.92, down by 7.29% or 475.87 points from its end-2024 finish of 6,528.79.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said that if anti-corruption measures and governance reforms are pursued seriously, markets could sustain gains above 6,000.

“Local market sentiment was largely supported recently by the S&P’s latest affirmation on the Philippine credit ratings and positive outlook shows that the country’s economic and credit fundamentals remain intact despite geopolitical risks, the Trump factor, and local political noises recently,” Mr. Ricafort said in a Viber message.

In November, S&P Global Ratings kept the Philippines’ long-term “BBB+” and short-term “A-2” ratings with a “positive” outlook, noting that growth prospects remain solid despite the corruption scandal.

The “BBB+” sovereign rating is a notch below the “A”-level grade targeted by the government, while a positive outlook means the Philippines’ credit rating could be raised within 24 months if improvements are sustained.

AP Securities, Inc. Equity Research Analyst Shawn Ray R. Atienza said the PSEi may get stuck between the 6,000 and 6,400 level as weak manufacturing, slow consumer spending, and tighter infrastructure disbursements could hold back growth.

“Conversely, we anticipate 2025 fourth-quarter earnings of mining stocks to cushion macroeconomic woes and serve as a natural hedge against the weakening equity market and depreciating peso,” he said.

The peso on Monday closed at P58.79 per dollar, depreciating by eight centavos from its P58.71 finish on Friday. Year to date, it weakened by 94.5 centavos or 1.61% from its P57.845 close on Dec. 27, 2024.

In a Viber message, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said the market could see a “solid recovery, potentially reaching 6,300-6,500” if data show strong fourth-quarter GDP growth and inflation remains stable.

Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said the local economy needs positive catalysts to restore confidence and get economic growth back on track.

“This would include inflation remaining under control, a robust labor market, signs that household consumption growth is re-accelerating, investments in the country are recovering, more progress on the investigation of the Philippines’ corruption issues that would in turn help reignite consumer and investor confidence,” he said.

F. Yap Securities Investment Analyst Marky Carunungan said that investors are weighing political and governance uncertainties, which may temper investment and economic momentum.

“For early 2026, we expect the PSEi to trade in a relatively contained 5,900-6,200 range as the market navigates mixed signals from both macroeconomic and policy fronts. The 5,900 level remains as key support, while heavy resistance around 6,120-6,200 continues to cap upside,” he said in a Viber message.

“Until there’s a clearer visibility on governance clarity, fiscal execution, and sustained foreign inflows, our stance remains wait-and-see, with a more constructive market outlook contingent on a decisive break above 6,200 level,” Mr. Carunungan added.

PSE President and Chief Executive Officer Ramon S. Monzon on Monday said that despite the PSEi’s decline last year, there are reasons to be optimistic this year.

“If our government succeeds in its drive to hold the corrupt accountable and institute real and lasting improvements in transparency and governance, our market should be one of the best-performing markets in the region next year,” he said in a statement on Monday.

IPO ACTION
The Philippine stock market may still face limited initial public offering (IPO) action in 2026, as some analysts forecast pointing to no more than four listings.

“We might have at most four IPOs in 2026. The most likely candidates are REITs and those in defensive sectors,” Mr. Colet said, noting that proposed changes to real estate investment trust (REIT) rules and lower interest rates could motivate some sponsors to move forward with REIT IPOs.

In November, the Securities and Exchange Commission (SEC) released a draft memorandum circular proposing updates to the REIT rules to broaden the definition of income-generating assets, extend sponsors’ reinvestment deadlines, and strengthen disclosure and governance requirements.