THE Philippine Stock Exchange index (PSEi) is expected to rebound in 2026, but analysts have lowered their target to 6,800, down from 7,100 previously, given governance concerns, a likely end to monetary policy easing and global trade dynamics.
Unicapital Securities Inc. on Tuesday noted that valuations remained attractive, trading at a forward price-to-earnings ratio of around 10.5x, below the 10-year average of 16.4x.
Wendy Estacio-Cruz, head of research at Unicapital, said the revision reflected several key factors.
“[N]umber one, the corruption scandal. We still think that infrastructure spending will take time to recover and might see some impact on the second half of the year," she said.
"Next is monetary policy — we’re seeing a pause after these 25 basis points, which is our house view. And then lastly is the geopolitical tension and the US tariffs."
Dennis Lapid, officer-in-charge of the Monetary Policy Sub-Sector at the Bangko Sentral ng Pilipinas, highlighted the inflation outlook during the same event.
“Our forecasts indicate a slight uptick in inflation this year, largely due to supply-side actors. While these price pressures are likely to be temporary, they nonetheless require continued vigilance owing to possible spillover effects.”
Unicapital analysts said the PSEi’s recovery would be supported by a rebound in public infrastructure spending (P1.3 trillion in 2026, or 4.3 percent of GDP) and ongoing governance reforms, which are expected to restore investor confidence.
“Our strategy for 2026 is defensive yet opportunistic,” Estacio-Cruz said. “We are prioritizing balance sheet strength and earnings visibility while maintaining selective exposure to structural growth themes.”
The firm also recommended a 15-stock high-dividend basket with an average 2026 expected yield of 5.6 percent, including AREIT, Maynilad Water, and Puregold Price Club.