Philippine Stock Market Investment Report

April 2025

Executive Summary

This comprehensive investment report analyzes the Philippine stock market with a focus on identifying suitable investment opportunities for an investor with the following parameters:

• Investment timeframes: Short-term (3-6 months), Mid-term (1-5 years), Long-term (5+ years)
• Risk tolerance: All levels considered
• Investment goal: Balance between capital appreciation and dividend income
• Budget: PHP 5,000 per month
• Monitoring capacity: Limited to 2-4 market checks per month

The Philippine Stock Exchange Index (PSEi) currently stands at 6,145.6 points, having decreased 5.87% since the beginning of 2025. Despite this underperformance, analysts are cautiously optimistic about a recovery, with projections for the index to reach 7,500-7,800 by year-end. This optimism is supported by strong economic fundamentals, including 6% GDP growth, easing inflation (now at 3.2%), expected BSP rate cuts, and various growth catalysts.

Our analysis begins with a detailed evaluation of Ayala Corporation (AC), a blue chip stock, followed by recommendations for additional investment opportunities across various sectors. The report provides a strategic investment approach tailored to the investor’s specific requirements, with emphasis on stocks that don’t require constant monitoring.

Current Market Conditions

Economic Indicators

• GDP Growth: The Philippines remains one of the best-performing economies globally, expanding by an average of 6% under President Marcos’s administration.
• Inflation: After elevated levels in 2022 (5.82%) and 2023 (5.98%), inflation has returned to the target range of 2%-4%, decreasing to 3.2% in 2024.
• Interest Rates: The Bangko Sentral ng Pilipinas (BSP) is expected to cut rates by a total of 50 basis points in 2025, likely in 25-bp increments each in the first and second half.
• Labor Market: Unemployment and underemployment rates showed marked improvements in 2024 compared to 2023 and pre-pandemic levels.

Market Performance

• PSEi currently at 6,145.6 points (down 5.87% YTD)
• Analyst projections for year-end 2025:
  • FirstMetroSec: 7,600
  • Sun Life Investment Management: 7,500 (moderate projection)
  • Unicapital: 7,800

Growth Catalysts

1. Interest Rate Cuts: Expected monetary easing by the BSP
2. Midterm Elections: Anticipated to stimulate consumption and economic activity
3. Attractive Valuations: Current market levels considered cheap relative to historical valuations
4. Return of Foreign Funds: European funds likely to return following the Philippines’ exit from the Financial Action Task Force’s “gray list”
5. Resilience to External Factors: The Philippines is considered less vulnerable to US tariff threats

Potential Risks

1. Global Uncertainties: Impact of US policies, external inflationary pressures, geopolitical tensions
2. Remittance Concerns: Tightened US immigration policies could affect remittances from overseas Filipino workers
3. Foreign Fund Outflows: Continued exodus of foreign funds from the Philippine market