(Nov 3): It’s the textbook investment strategy — save consistently and let time and compound interest do its work. That’s what Carl Edison Balagtas did in 2016 when he started socking half of his monthly salary into the Philippines stock market in hopes of securing his future.
Ten years on, that strategy didn’t just fall short — it turned out to be one of the worst investment decisions the Manila-based lawyer could have made. “I was hoping the stock market would be the vehicle to achieve my goal but it did not turn out that way.”
Balagtas’s experience reflects a deeper malaise in the Philippine equities market, which has persistently lagged behind regional and global peers. Over the past decade, the benchmark Philippine Stock Exchange Index has tumbled 20%, making it the worst performer among global benchmarks tracked by Bloomberg. By contrast, a gauge of Asia Pacific stocks have jumped 72% while neighbouring Indonesia’s Jakarta Composite Index has surged 82%.
The PSEi tumbled as much as 2.8% on Monday, extending the year’s decline to over 11%, the weakest showing in Asia. Structural challenges like limited market diversity, sluggish turnover and a dearth of new listings continue to weigh on sentiment, while a major government scandal has further eroded investor confidence. While regulators have pledged reforms to improve liquidity and boost participation, analysts say more aggressive action is needed.
“The risk is the Philippines might become so marginal, people will stop looking at us,” said Eduardo Francisco, the president of investment bank BDO Capital & Investment Corp. “Companies are making money, they are meeting their targets, but the demand is not there.”
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The stakes couldn’t be higher ahead of Maynilad Water Services Inc’s listing this week, which would mark the country’s largest initial public offering (IPO) since Monde Nissin Corp’s debut in 2021. The IPO raised US$527 million after the company exercised an option to increase the deal size, according to terms of the deal seen by Bloomberg News.
As the country’s US$226 billion stock market struggles, Maynilad’s performance could serve as a key litmus test of investor appetite. A successful listing would spur much-needed excitement into an economy grappling with currency pressures and trade restraints.
Structural challenges
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Underlying the persistent weakness is a lack of diversity in the market. The MSCI Philippines Index has only 11 members, with over two thirds of the gauge concentrated in financials and industrials. That compares to neighbouring markets like Malaysia, Indonesia and Thailand, which have more balanced compositions and include bigger representation from consumer, technology and healthcare sectors.
The challenges run beyond a lack of diversity. The country has only listed a fraction of the companies than its regional peers. Over the past five years, newly listed firms have seen their shares drop by about one-third on a weighted average basis, according to data compiled by Bloomberg, compared to a nearly 50% increase across Southeast Asia.
“There are a lot of corporates who are on the lookout to do IPOs — but the timing has to be right especially for the sizeable ones,” said Pamela Victoriano, the senior vice-president of investment banking of Unicapital Inc.
Casino operator Hann Holdings Inc postponed its up to 11.8 billion pesos IPO originally scheduled for September due to market conditions, while financial technology giant GCash has delayed its Manila listing to the second half of 2026. Only one firm — fuel trader Top Line Business Development Corp — has braved going public this year.
For Isidro Consunji, the chairman of DMCI Holdings Inc and Semirara Mining & Power Corp, the market’s poor response to strong financial performance has been a source of frustration. Despite Semirara’s net income jumping more than 80% over the past decade, shares have slid. DMCI’s profits rose nearly 50% in the same period, but shares have fallen more than 9%.
“Foreign investors don’t pay attention to the Philippine stock market,” Consunji told Bloomberg. “The Philippine economy is weak, we can’t do anything about it.”
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Securities and Exchange Commission chair Francis Lim readily accepts that structural and integrity issues are plaguing the stock market. To address this, his agency is pushing for state-owned firms to go public and is rolling out new guidelines aimed at attracting foreign investors.
Those prospects coupled with continued rate cuts by the central bank and humming economic growth prospects could spur some upside, analysts say.
The Philippine Stock Exchange is also hoping to educate more retail investors and ease listing requirements and various disclosures to revive interest. “What is the most important ingredient in the stock market? Confidence. But there is none,” according to Bourse chief executive officer Ramon Monzon.
For now, the Philippines is stuck in a rut, offering bargain prices to domestic and foreign investors alike. That’s forcing investors like Balagtas to look elsewhere when thinking about his future. “What I realised is when you see gains, sell it. It’s unlike the US which continues to go up. What can I say, I am so disappointed.”
Uploaded by Tham Yek Lee
