Trump 2.0, monetary policy to drive PHL stocks

By Revin Mikhael D. Ochave, Reporter

THE Philippine Stock Exchange index (PSEi) could trade at 7,000-8,000 this year, with the start of US President-elect Donald J. Trump’s second term, the direction of global monetary policy, and the midterm elections in the Philippines to dictate the market’s movement.

The PSEi closed 2024 at 6,528.79, rising by 1.2% or 78.75 points from its end-2023 finish of 6,450.04. This marked the first time since 2019 that the index posted a year-on-year increase.

The local stock barometer could peak at just 7,600 this year amid market caution as Mr. Trump begins his second term as US President, China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“[This] year presents a complicated picture. While we remain positive about the growth prospects of the Philippine economy and the earnings strength of many listed companies, we approach 2025 with caution as there is a lot of uncertainty around Trump 2.0. Just like his first term, we expect that Trump’s social media posts will again move markets, so investors should be ready to manage that volatility,” Mr. Colet said.

The upcoming Philippine midterm elections and geopolitical issues could bring additional uncertainties, he added.

“We are wary of the impact of potential natural disasters and geopolitical stress on our country’s economy. Investors will likewise keep a close eye on the midterm elections as the outcome thereof could either ensure stability or create uncertainty.”

BDO Capital & Investment Corp. President Eduardo V. Francisco said in an interview that the market could trade between 7,000 to 7,500 this year.

“Even if the US announces a rate cut, it is not necessarily good. Also, when the peso depreciates, the foreign investors will get hurt because the hot money wants the peso to be strong and stable,” he said.

AP Securities, Inc. Research Head Alfred Benjamin R. Garcia held a “cautiously optimistic outlook” for Philippine stocks for this year, citing the market’s potential despite headwinds.

“We think that the fundamentals are there to lift the market higher, but we do acknowledge that we face numerous headwinds like shallower rate cuts and the probability of another global trade war,” he said in a Viber message.

“Despite concerns about both international and local factors – such as macroeconomics, geopolitical situations, and the new United States president — the numbers and valuations of PSEi present a positive outlook,” Luna Securities, Inc. Research Officer and Market Strategist Annika Gabrielle S. Angeles said in a market report.

Ms. Angeles said under their baseline scenario, the PSEi could trade between 7,030 and 8,080 this year.

COL Financial Group, Inc. Chief Equity Strategist April Lynn C. Lee-Tan said market drivers for 2025 include lower inflation and interest rates, as well as the midterm elections.

She added that the market’s “attractive valuations” and the recently signed Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act could provide an investment boost.

However, Ms. Tan said the US market’s volatility is a potential risk as this could spill over to the Philippines.

“The Philippines suffers from contagion when it comes to the volatile US market,” she said.

“Any improvement in local and external market conditions, especially if the PSEi goes up to 7,000-8,000 levels, would help encourage more fundraising activities in local stock markets such as initial public offerings, follow-on offerings, preferred shares offerings, stock rights offerings, private placements, among others,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.