The Philippine Stock Exchange index (PSEi) is expected to post modest gains of just 3 percent to 5 percent by year-end from its current level of 6,100, largely driven by the seasonal Christmas spending surge, according to Eduardo Francisco, president of BDO Capital and Investment Corp.
Speaking on the sidelines of the Energy Forum organized by the Economic Journalists Association of the Philippines, Francisco said the market’s subdued performance is likely to persist, absent any strong catalysts.
“Unless major heads roll, I think that will attract investors. We should seek for a ‘new fire’ and not focus on the negative,” Francisco said, adding that current legislative hearings on alleged corruption in flood control projects have cast a shadow over investor sentiment, particularly among foreign players.
“Why would they invest in us if the money will only be lost (to corruption)?” he added.
The PSEi closed marginally higher on Thursday, up 6.80 points to 6,126.89.
Francisco noted that while holiday consumption—boosted by overseas Filipino workers’ remittances—could support the market, it may not be enough to offset negative sentiment stemming from political developments. Still, he emphasized that the weak equity market does not reflect the strength of the broader economy.
“Loan growth is a good indicator,” he said, pointing to strong lending performance across BDO Unibank’s consumer, housing, auto, and credit card segments. Corporate loans are expanding at 10 percent to 11 percent, while the country’s top banks—Metrobank, BDO, and Bank of the Philippine Islands—are outpacing industry loan growth with 13 percent gains, compared to the sector’s 11 percent to 12 percent.
“Usually, loan growth is a multiple of GDP… maybe 1.5 or 1.6 times. That’s the historical trend. So it’s really showing that there’s growth,” Francisco said.
He also cited the vibrancy of the informal sector, noting, “Many of us are in the underground economy. But it’s really the underground economy that’s increasing. We are stronger than we are today.”
