Roadblocks to Philippine listings

The Philippine economy has emerged as among the world’s growth leaders, but the domestic stock market has been unable to ride the wave as long-standing issues turn investors away.

We often mention in our articles and webinars that the performance of equities typically does not mirror macroeconomic conditions, but mostly in the context of strong stock price valuations against the backdrop of weaker-than-expected GDP or jobs figures. This is true in the experience of China and even the US, where equities have surged despite escalating global trade tensions and softer economic data. Unfortunately, it is the reverse for the Philippines: the Philippine Stock Exchange (PSE) index has been unable to take off despite its fast-growing economic homebase.

Investors who placed their bets on the PSE Index, which is composed of 30 blue-chip stocks, back in 2015 have had to absorb a 13.4 per cent loss in portfolio value as of end-November 2025 – all while the Philippine economy expanded by 48.4 per cent over the same decade. This performance is the world’s worst across global stock markets for the year.

Worst performer

Philippine shares have slid lower since 2020, with a post-pandemic recovery proving to be short-lived. As Graph 1 illustrates, total capitalization of publicly listed companies in the Philippines grew by just 5 per cent from 2015 to 2024, lagging behind peers in the region. Over the same period, the value of listed companies in Malaysia rose by 17.4 per cent, Thailand by 49 per cent, and Vietnam by nearly 250 per cent.  

The PSE index appears headed into another bad year, posting a 7.8 per cent decline for the first 11 months of 2025. In contrast, the MSCI Emerging Markets index is up 27 per cent year-to-date, the latter composed of listed firms from mainland China, Taiwan, and India, to name a few.

What is holding back Philippine stocks from surging like its peers? We believe the concerns are both structural and reputational, and addressing both requires decisive, long-term policy reforms. On the surface, Philippine capital markets are shallow, providing little incentive for companies to raise funds via equities. This shallowness stems from limited financial inclusion and squeezed households, which are preventing idle savings from finding its way back into the financial system for productive use.

Tight foreign ownership restrictions also hold back many risk-seeking global investors from fully participating in the Philippine stock market, with the total amount of allowed foreign investment varying by industry. PSE data show only 1 per cent of stock market accounts are held by foreigners. Graph 1 also shows the inverse relationship between tight regulations and stock market growth across ASEAN, with Singapore – dubbed the least restrictive – having the largest stock market valuation.

There have been efforts to allow more foreign equity in Philippine firms by way of allowing up to 100 per cent ownership of telecommunications and transport companies, and simpler taxes on capital gains and passive income. However, the thought of an impenetrable wall that has existed for decades will not be undone overnight. Recently, corruption concerns stemming from government flood control projects complicate the picture for investors, making local stocks far less attractive globally.

Listing drought

The very same concerns hinder more companies from going public in Manila. With only two companies completing initial public offerings (IPOs) so far, PSE’s year is turning out to be very quiet. Meanwhile, the Hong Kong Stock Exchange saw four listing debuts on 28 October alone, a stark contrast to its neighbour.

The last time the Philippines saw public listings hit double digits was in 2022, but the cumulative value of these transactions had been small at USD 167 million as seen in Graph 2. In fact, delistings outpaced IPOs, with three companies exiting the bourse for 2025.

The recent hope is that the long-delayed listing by Maynilad Water Services will finally get the PSE’s momentum going. Maynilad debuted on the local bourse on 7 November at PHP 15 (USD 0.25) per share, cheaper than its original offer price of PHP 20 (USD 0.34). It even had assured investments from the Asian Development Bank and the International Finance Corp., the latter a subsidiary of development lender World Bank. Still, this was not enough to inject cheer into the bellwether index, which has slid lower in November. Many other companies, including those engaged in financial technology and real estate, have indefinitely postponed their listing plans amid high uncertainty in the global markets.

What can the Philippines learn from success stories within Asia? A common feature of stock markets in Hong Kong and Singapore – two of the preferred exchanges in the region – is loose regulation that makes it easier for companies to choose these local exchanges to list on.

China took a more direct way to boost capital markets by imposing a mandate for state-owned insurance companies to increase their stockholdings, which is seen as among the catalysts driving the year-to-date surge in Chinese equities. The Organisation for Economic Cooperation and Development suggests taking government-owned corporations public, with the Land Bank of the Philippines – currently the country’s second-largest bank in asset terms – as a promising candidate. This would deepen the local stock market and add variety to the roster from which investors can choose from. However, there is also a risk that this could turn investor appetite for the worse if governance issues at the national level creeps into the stock market.

There is no doubt that the Philippines must loosen, not tighten, its chokehold on the stock exchange if it truly wants to unlock a new era of investing in the country. We see economic fundamentals remaining robust for the Philippines. That said, the economy needs more investments to fuel further growth, and accepting more foreign capital would go a long way in supporting this.