• The early-year market rebound offers relief, but key risks remain unresolved.
• Weak GDP data confirms a deeper slowdown, raising pressure on policy makers.
• Global uncertainty is driving investors back toward defensive assets.
As it stands, the Philippine Stock Exchange has started the year on a strong note, rebounding from a prolonged drawdown that felt like an eternity.
Thankfully, Santa Claus was just a bit tardy in delivering gifts to investors desperate for sweet relief to offset their portfolio pains.
Costly ambiguity
After a strong market rebound, it is reasonable to assess whether this rally is sustainable or just a fleeting moment of optimism.
Notably, no underlying issues have been resolved, some headwinds were even renewed, and the exchange has yet to roll out any transformative changes from investors’ wish lists to entice better market participation.
The least we have were the REIT law amendments, which finally provided clarity on what qualifies as “income-generating real estate,” as the previous version pegged the definition on revenue-based activities (e.g., rentals, toll fees) rather than specifying the types of assets.
Had this version been the initial law, REIT listings could have expanded beyond traditional property developers during the asset class’ record-breaking 2025.
Ambiguities like these deter growth, cost opportunities, and induce fear.
Now, we pay the price of not having better options that could have cushioned losses last year.
Timely clarity
For better or worse, a twin pair of economic data—fourth quarter gross domestic product growth and the US policy rate—took matters into their own hands and provided clarity yesterday.
Overseas, the US Federal Reserve hit pause and kept policy rates at 3.5–3.75 percent.
On the other hand, a widely expected disappointment suddenly turned into a cruel nightmare.
Fourth-quarter 2025 GDP growth ended up at 3 percent, massively undermining full-year 2025 growth to 4.4 percent and falling far short of the revised 5.0 percent GDP target set by the government.
This also marks the administration’s third straight year of a shortfall despite yearly downward revisions to its goal.
The aftermath puts immense pressure on the Bangko Sentral ng Pilipinas ahead of its monetary board meeting on February 19.
Despite little room for maneuver, the degree of slowdown may push the central bank to cut another 25 basis points to prop up growth and abandon defending the peso completely.
Luckily, the weakening dollar is providing temporary relief, but how long can the cushioning continue?
The real aftermath
For an import-heavy country, this could unwillingly accelerate inflation as companies work around margin erosion through pass-through mechanisms, but may suffer from weaker demand.
Listed consumer powerhouses with dollar-denominated debt and reliance on imported raw materials should be the biggest victims of this chain of events.
But as they say, “bad news is better than uncertainty,” as risks will be priced more efficiently and rotate to different sectors with strong catalysts or even entirely different investment vehicles.
A familiar scene
Even with some clarity seen this week, renewed global headwinds continue to affect markets as Trump decided to rain down hell on every breathing person seeking respite.
His back-and-forth announcements and retractions of tariffs keep markets volatile, triggering a flight to safe-haven assets and a surge in de-dollarization trades to capitalize on the US dollar’s weakness.
This pattern is familiar: global markets are once again turning to gold as a hedge against uncertainty.
This time, however, more metals are vying for the spotlight.
These include announced production cuts in copper from China, supply disruptions in Chile, and a roughly 34 percent reduction in nickel output as promised by Indonesia’s energy minister.
By the looks of it, the market is operating on the same ground as last December.
This excessive uncertainty could desensitize the local market to the point that seller exhaustion emerges as a catalyst down the line, as seen from last year’s streak of net foreign selling that has now turned into net foreign buying for most of January.
For now, investors should act the same: monitor global developments and play defense until clearer signs of an economic rebound emerge.
Financial market recommendations and comments on InsiderPH News belong solely to the analysts and institutions making them. They do not represent buy, sell or hold recommendations of InsiderPH News. Investments held by analysts or institutions may influence their recommendations. Investors should conduct their own research and carefully evaluate all relevant market information before making investment decisions. As always, the past performance of any investment does not guarantee its price appreciation in the future.
