Philippine Stock Market Outlook for 2025: Cautious Optimism Amidst Global Headwinds

The stock market could move in either direction during the first trading week of 2025, according to analysts. This depends on how investors perceive the year ahead. The benchmark Philippine Stock Exchange index (PSEi) gained 1.2% year-on-year, despite dipping on December 27, the last trading day of 2024. It ended at 6,528.79, up 78.75 points from the previous year's 6,450.04. Philippine financial markets, closed from December 30 to January due to holidays, reopened today.

Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the gains at the end of last year to signals from Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. that another rate cut could be ordered during the first policy meeting of 2025. He stated that monetary policy is still somewhat restrictive due to concerns about inflation rising again. Therefore, investors are comfortable with gradual easing/rate cuts. Online brokerage firm 2TradeAsia.com, however, warned that challenges could limit broad-based rallies this year. Potential risks include inflationary pressure from policies implemented by US President-elect Donald Trump, a weaker China, a stronger US dollar, and more hawkish central banks. 2TradeAsia noted that consensus expectations for rate cuts have weakened in recent weeks. Investors are advised to prepare for a slowdown as pessimism is reflected in security prices. Local decision-makers may remain hesitant until the political and economic situation clarifies after the crucial midterm elections in May. As a result, 2TradeAsia suggests that a bottoms-up investment approach could be more effective than a top-down approach.

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