PSEi seen in limbo until ‘heads roll’

Eduardo V. Francisco, President of BDO Capital & Investment Corporation

MANILA, Philippines — The Philippines may not be able to bring investors back to local equities unless “major heads roll,” proving that the government is serious in addressing graft and corruption, according to an investment banker.

BDO Capital and Investment Corp. president Eduardo Francisco on Thursday told reporters the current political environment—marred with mounting corruption allegations against top government officials—was distracting the market from relatively better macroeconomic conditions.

“Unless major heads roll to show that graft is being addressed, I think that would attract investors,” Francisco said on the sidelines of the Economic Journalists Association of the Philippines’ energy forum.

READ: DPWH to file 25 ‘nonbailable’ cases over flood control anomalies

“It’s a shame because [economic] growth is really good … in relation to [the latest] unemployment data, it’s still very good. But the political noise is distracting,” he added, when asked why the index was not performing according to expectations.

Analysts previously explained that the market remained lethargic due mainly to ongoing investigations into anomalous flood control projects across the country.

The Department of Public Works and Highways recently sacked one of its officials over his supposed involvement in “ghost” flood control projects in Bulacan province.

Its former head, Manuel Bonoan, stepped down from his post days before Congress began its probe. Former Transportation Secretary Vince Dizon immediately replaced him.

Poised for 5% climb

Still, Francisco said the main share Philippine Stock Exchange Index (PSEi) may climb by up to 5 percent this year if the economy continues its growth trajectory.

This entails that the PSEi would end the year at 6,855 from its 2024 closing value of 6,528.79.

READ: PSEi languid amid lack of movers

In the second quarter, the Philippine economy grew by 5.5 percent, up from 5.4 percent in the first quarter, as easing inflation boosted the spending power of consumers.

Stock exchange data also showed that trading was generally active in the first semester—net value turnover averaged P5.7 billion daily, higher than P5.02 billion in the same period last year.

However, the local stock barometer still ended the January to June period down by 2.51 percent to 6,364.94.

This is also well below the index’s peak of 7,500 in October 2024, or the beginning of the Bangko Sentral ng Pilipinas’ monetary policy easing cycle and before US President Donald Trump returned to the White House./ rwd