Analysts expect stock market recovery this year

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January 5, 2026 | 12:00am

MANILA, Philippines — Coming off what many would consider as a disappointing year, the Philippine stock market looks to shift to a higher gear this 2026 amid expectations of renewed investor confidence.

After the market experienced multi-year lows and deep corrections that pushed valuations to discounted levels relative to regional peers last year, the outlook for stocks has turned constructive, Unicapital Securities head of research Wendy Estacio-Cruz said.

She said the combination of easing inflation, potential interest rate cuts and relatively attractive valuations provides a supportive backdrop for equities.

“As economic growth gains traction and investor confidence improves, the market is well-positioned for a gradual but meaningful recovery. While volatility may persist, the risk-reward profile appears increasingly favorable, particularly for long-term investors,” Estacio-Cruz said.

The road to recovery, however, is expected to be filled with challenges and uncertainties.

AP Securities Inc. equity research analyst Shawn Ray Atienza said early jitters can be expected as clear issues are carried over this year.

“We expect more of the same come early 2026 as we await for clarity on different fronts. Mainly, if government spending normalizes and translates to a substantial boost on our economy,” he said.

Atienza said global headwinds and political instability were the main culprits for the market’s dismal performance in 2025.

For this year, he said mining companies are expected to deliver strong earnings in the fourth quarter of 2025 and first quarter of 2026 and continue to outperform the broader market.

“This is supported by higher prices for gold, silver and copper, as investors turn cautious amid uncertainty over the US economy, the Fed’s firm policy stance for 2026, concerns about an overheated artificial intelligence sector and tighter supply due to production disruptions and planned cutbacks,” Atienza said.

China Bank Capital Corp. managing director Juan Paolo Colet said the market could rise to around 6,600 to 6,700 should there be decisive action on governance issues as well as a sustained trend of growth domestic product growth above five percent.

However, he said there is a risk of the index revisiting 5,600 or lower if economic growth stalls or fresh governance concerns emerge.

“We advise investors to have a balanced exposure to equities and fixed income instruments so that they can better ride out any stock market volatility in the next 12 months,” Colet said.

Colet sees four initial public offerings (IPO) at most this year, with real estate investment trusts (REITs) among the most likely candidates.

He said the proposed amendments to the REIT rules and falling interest rates could encourage certain sponsors to push through with their REIT IPOs.

Meanwhile, Colet said delistings are also likely to persist for 2026.

“This trend is not unique to the Philippines, as we also see it in Singapore, Hong Kong and even London. Among the big factors driving delistings are the rise of alternative sources of capital, market undervaluation and thin trading liquidity,” he said.

Philippine Stock Exchange Inc. president and CEO Ramon Monzon said the exchange would continue to implement initiatives focused on deepening liquidity, broadening access for companies and investors, enhancing technology platforms, advancing sustainability as well as improving overall regional competitiveness.

“We will continue to work closely with our regulator and other market participants to carry out our strategic priorities for the year,” he said.

Monzon said the first trading day of 2026 was off to a good start with the benchmark PSE index gaining 82.14 points or 1.4 percent to 6,135.06.

“The gain of 1.4 percent in the PSEi on the first day of trading augurs well for the much awaited turnaround of our stock market in the coming year,” Monzon said.

“The success of the administration in exacting accountability from the perpetrators of the corruption scandal and the institution of strong governance reforms are the principal catalysts needed in restoring investor confidence in the country and the stock market,” he said.