April Lee Tan, vice president of COL Financial, has expressed optimism for the Philippine stock market in 2025, predicting that it will benefit from low inflation driven by decreasing rice prices. This outlook comes as the Bangko Sentral ng Pilipinas (BSP) is expected to maintain its monetary easing policies, which should support domestic consumption and investment [ce215b88].
This positive sentiment follows a recent downturn in the Philippine Stock Exchange Index (PSEi), which fell to 6,343.10 on January 13, 2025, largely due to strong US labor data raising inflation concerns and leading to a reevaluation of expectations regarding Federal Reserve rate cuts. The broader all shares index also experienced a decline of 1.33% [bee26bd3].
Despite the recent volatility, Tan believes that the upcoming 2025 elections will further stimulate economic growth through increased government spending. Additionally, the CREATE MORE Act is anticipated to enhance the business climate and attract foreign direct investments, contributing to a more robust market environment [ce215b88].
However, risks remain, including a weaker-than-expected Q4 GDP, rising U.S. interest rates, and potential global market volatility. In light of these factors, Tan recommends a barbell investment strategy that balances defensive and cyclical stocks [ce215b88].
Prior to this analysis, the PSEi had shown signs of recovery, closing above 7,400 for the first time since 2022, buoyed by positive economic indicators such as a cut in interest rates by the BSP. The index had gained over 20% from its low in June 2024, driven by robust economic growth projections from the International Monetary Fund (IMF) [5608dec7].
As the market navigates these fluctuations, local investors are advised to focus on defensive stocks and maintain cash reserves for potential bargain opportunities. The PSE plans to launch global Philippine depositary receipts in Q1 2025 and aims to unify local capital markets through the acquisition of Philippine Dealing System Holdings Corp. for P2.32 billion [3cf7f18e].