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Is the Philippine Stock Exchange Still Worth Investing In? Expert Breakdown 2025
Personal Anecdote
When I first visited Manila in 2019 as part of my emerging-markets research practice, I found myself sitting in a modest coffee shop in Makati, talking to a local retail investor who proudly told me he had been buying stocks every month for five years “to build wealth for my children.” Fast-forward to today: his disappointment was palpable. Why? Because the benchmark index he relies on has languished. That encounter stuck with me, because I realised I was looking at more than just a personal story — I was looking at a symptom of deeper structural malaise in the Philippine Stock Exchange (PSE) that even industry insiders now call out plainly.
What’s happening and what it means
According to the recent reporting by Bloomberg LP, the Philippine Stock Exchange Index (PSEi) has fallen roughly 20% over the past decade, making it the worst-performing major benchmark globally. That’s in contrast to many of its regional peers: for example, the Asia Pacific region’s stocks have jumped approximately 70% in the same timeframe.
This isn’t a short-term blip. It’s a sustained under-performance, and it raises a red flag for anyone serious about emerging-markets exposure.
Here are the key structural issues the article highlights — and from my vantage as someone who has followed emerging markets for over five years, backed by local visits, data-dives and investor interviews, I can tell you these are real and not just superficial talking points:
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Limited market diversity: The PSE’s composition is heavily weighted in financials and industrials, with scant representation from higher-growth categories such as technology, healthcare or consumer discretionary. Analysts pointed out the MSCI Philippines Index has only 11 constituents.
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Low turnover and investor participation: Fewer listings, a small number of firms going public, and a history of newly listed companies seeing share-price drops rather than gains. As one local executive said, “Foreign investors don’t pay attention to the Philippine market.”
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Confidence deficit: The regulator, Securities and Exchange Commission (Philippines) (SEC) and the PSE management openly admit investor confidence is weak. CEO Ramon Monzon told Bloomberg: “What is the most important ingredient in the stock market? Confidence. But there is none.”
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Potential structural reforms in motion: The SEC is pushing state-owned firms to go public, easing listing requirements, and trying to attract foreign investor participation. These reforms might help — but the article rightly notes that much more aggressive change is required.
In short: the narrative of “cheap stocks, bargain basement valuations” is true. But cheap doesn’t guarantee good, especially when structural obstacles remain entrenched.
Expert critique & my opinion
Having worked in emerging-markets equity strategy for more than five years, I have had the privilege of examining multiple markets that looked “broken” at first glance — for example, markets in Eastern Europe, Latin America and Africa. From those experiences, I observe three things:
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Markets in trouble tend to be marked not just by poor performance, but by „why are we here?” questions: i.e., is the problem regulatory, structural, behavioural or a mixture?
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Structural issues require time and credible, visible reform to reverse confidence — not just announcements.
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Meanwhile, the market will price in risk ahead of reform: meaning that until investor behaviour shifts, price discovery can stay depressed.
Applying that to the Philippines:
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Reform plans are good but they are still tentative. The fact that the SEC is raising thresholds, easing listing requirements and encouraging state-owned entry is a positive signal — but these are medium-term moves. They don’t instantly fix the lack of market liquidity, few new listings, or concentration risk.
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Investor confidence takes longer than policy changes. The narrative “foreign money doesn’t look here” is already embedded. Rebuilding that takes track record, transparency, and a stream of good IPOs delivering upside. So far results have been weak: newly listed companies over the last five years, on average, have seen share-price drops rather than gains.
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Valuation alone is not enough. Yes, you can argue the market is “cheap” in some sense, but cheap without catalysts or with high uncertainty may stay cheap. From my experience, I’d classify the Philippines as a “cheap but problematic” market until substantial structural barriers are addressed.
In my professional view: the Philippines’ stock market can turn around, but I am cautious about short-term bounce. My prediction: over the next 12 to 24 months, we might see modest upside — maybe 10-20% — if some of these reforms show visible impact (e.g., a high-profile successful IPO, noticeable foreign institutional inflows, improved turnover). However — and this is critical — a sustained multi-year rally is unlikely until the market composition improves (more sectors), listing pipeline expands, and investor confidence rebuilds. In other words: catalyst + structural change = recovery. Lacking that, you may be waiting a long time.
What this means for you (reader/investor)
If you are watching the Philippines market or considering exposure, here are my strong-recommendation actions:
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Treat any investment in the Philippines as high-risk but potentially high-reward. Don’t assume “cheap = safe.”
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Focus on companies with global or regional competitiveness, not just domestic firms. If a company listed in the Philippines is diversified, shows strong earnings growth, and has management that is transparent — that could be a more compelling play.
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Monitor reform execution: Key indicators include number of new IPOs, foreign investor participation levels, turnover volumes, and sector diversification in the index. Without these, the market risk remains elevated.
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Use the Philippines as a tactical play, not strategic core exposure. In your emerging-markets allocation, it may make sense to keep Philippines exposure modest until you see stronger signals.
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Consider hedging or diversifying away from market-specific risk. If you invest in the Philippines, also have positions in other emerging markets that have stronger structural underpinnings (for balance).
Immediate, actionable steps
Here are three clear steps I recommend you take today if you’re tracking this market:
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Review any current Philippines-listed holdings: Check if their earnings growth, governance, sector exposure and foreign investor profile are strong. If they are weak, consider trimming exposure.
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Set up monitoring for structural reform indicators: For example, track how many new IPOs are launched in the Philippines, how turnover and foreign investor flows evolve over the next quarter.
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Reallocate or hedge accordingly: If you believe the Philippines remains structurally weak, reduce your allocation and shift to more promising emerging-market opportunities. If you’re risk-tolerant and believe in the turnaround, keep exposure but size it conservatively.
Disclaimer: The information provided here is for general informational purposes and does not constitute investment advice. You should consult a qualified financial advisor and consider your personal financial situation, investment objectives and risk tolerance before making any investment decisions. Past performance is not indicative of future results.
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© 2025 FlowandFind. All rights reserved by the original publisher. The summary above is original work by this blog author, with attribution and link to the source.