RESTORING foreign investor confidence through faster government spending and stronger governance reforms will be crucial to reviving the Philippine stock market, an analyst said, as the country’s economic slowdown and geopolitical uncertainties continue to weigh on investment sentiment.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), told The Manila Times that the government’s catch-up spending program could help improve economic growth and encourage foreign direct and portfolio investments, providing support for the equities and capital markets.
“Catch-up spending is needed. This would be a confidence booster for foreign direct investments, as well as for the stock market and capital market,” Ricafort said.
He said investors consider economic growth and governance standards when evaluating investment destinations, making the implementation of reforms important to restoring confidence in the Philippines.
Ricafort said the country should aim for economic growth of around 5 to 6 percent, supported by more consistent infrastructure spending.
Better governance
He also cited proposed reforms involving political dynasties, the party system, government procurement and public accountability as measures that could strengthen transparency and improve the investment climate.
He said better governance, coupled with stronger economic activity, could help attract foreign capital and support the recovery of the domestic stock market.
The Philippine Stock Exchange index (PSEi) fell 25.23 points, or 0.44 percent, to close at 5,680.35, on Friday, reversing part of Thursday’s gains as investors took profits and reduced exposure amid lingering economic and geopolitical concerns.
“The PSEi corrected slightly lower, by -23.23 points or -0.4 percent to close at 5,680.35, among two-week lows or since Oct. 15, 2026 and also near one-year lows or since Nov. 14, 2025,” Ricafort noted.
This, he said, was due to the incoming the long holiday weekend; global crude oil prices among 6-month highs amid recent signals about a possible US attack on Iran; US stock markets mostly corrected slightly lower from new one-week highs after mostly faster US economic data lately that could lead to future Fed rate hikes.
GT Capital Holdings Inc. was the PSEi’s top gainer, advancing 4.03 percent, while Aboitiz Equity Ventures Inc. posted the steepest drop among index constituents, falling 3.67 percent.
Ricafort said for the month of October, the PSEi has corrected marginally higher after declining for two straight months.
He said initial support for the next trading day is 5,600.
“Next important support over the past 11 months stands at a low of 5,584.35 posted on Nov. 14, 2025 or more than 11 months ago during the height of the recent political noise, corruption accusations on the anomalous flood control projects back then,” Ricafort noted.
Despite the external risks, Ricafort identified some potential sources of support for local financial markets, including the recent affirmation of the Philippines’ credit ratings by Japan Credit Rating Agency, Moody’s Ratings and Rating and Investment Information Inc.
He also cited JPMorgan Chase & Co.’s planned inclusion of Philippine government bonds in its Emerging Market Local Bank Index starting Jan. 29, 2027, which could encourage additional foreign investment in the domestic debt market.