An optimist’s guide to investing in 2026
Question: This will sound like a rant but here goes. The PSEi is currently down in the dumps. The index has not even gone back to its pre-COVID 19 levels and is one of the few stock markets in Asia that have a negative year-to-date return in 2025.
While inflation is down, so is economic growth. The government is expected to be going on its third year of missing its own growth targets. The government’s hands are tied when it comes to pump priming the economy as widespread and brazen corruption is shaking investor confidence to the core. And yet, the crooks seem to be able to avoid conviction with ease.
The Philippine Peso has weakened to around P59 is to $1, way past what used to be its weakest point of P56 is to $1. Some are saying the Philippine peso may even breach P60 is to $1, especially with the Bangko Sentral ng Pilipinas’ seeming inclination to do aggressive rate cuts.
Political leaders are fighting with each other while the masses continue to suffer. The September 2025 self-rated poverty survey of the Social Weather Stations revealed that 50 percent of Filipino families see themselves as poor, up by 1- percentage point from the June 2025 survey.
Perhaps I am better off investing abroad, right?
Answer: There is no doubt that you need to practice diversification when investing. And doing geographical diversification is one of them—just factor in the currency risk that you will be taking.
But I do not believe that you should just abandon the Philippine stock market altogether, and here is why.
While the PSEi has not yet reverted to its pre-pandemic level, some individual stocks have done so. If you pore over research reports on Philippine stocks, you will see that many of these stocks, once they hit their respective target prices, will produce stellar total returns that range from 20 percent to 50 percent from their current bargain levels. Listed Philippine companies are strong. It is just negative sentiment that is driving stock prices lower.
Some say that foreign funds, which have the capacity to lift markets, are not interested in the Philippines because the country’s allocation in the MSCI AC ASEAN index is a paltry 5.22 percent and that the index itself has underperformed the MSCI Emerging Markets (EM) index. Moreover, estimates show that Malaysia, Indonesia, Thailand and the Philippines comprise roughly only 7% of the MSCI EM index.
Still, if a fund manager wants to have a “kicker” in his portfolio when many of emerging markets have already run up, he will be looking at diamonds in the rough. And Philippine stocks are very much qualified. In fact, recently when the PSEi looked like it was about to fall to its COVID pandemic lows from the 5,600 level, it was foreigners who were quietly buying. Granted that foreigners were also selling when the index approached the 6,000 level, they still saw underlying value in Philippine companies. Even a small drop of investments from foreigners who are currently underweight on the Philippines has the power to lift the PSEi to the 6,000 level and beyond.
And there is justification to push the PSEi beyond the 6,000 level. Despite the downgrades in economic growth projections for the Philippines for 2025 and 2026, the country still ends up as either the second- or third-fastest growing economy in emerging and developing Asia, according to the latest economic outlook reports of the International Monetary Fund and Asian Development Bank. People just highlight the downgrades because psychologically, losses hurt more than gains please. And because of this way of thinking, negative headlines attract more readers and viewers.
What about the corruption in government? No less than Dr. Bernardo Villegas says that corruption is not entirely a hindrance to economic prosperity for as long as strong institutions are in place to keep the economy humming. Plus, political pundits are pointing to the new breed of voters that will be determining the next set of leaders, especially by 2028. In the last elections alone, this new breed was able to propel candidates to either victory or garner huge votes despite lacking the political machinery —- candidates who were not showing up in voter survey rankings. From 2022 to 2025, there was a three to four million net increase in registered voters. For the Aug. 1 to Aug. 10 registration campaign, there were 2.7 million new registrants, 65 percent of whom were from ages 18 to 30.
This is my optimistic view. It is now up to you to decide whether to agree or not.
Send questions via “Ask a Friend, Ask Efren” free service at personalfinance.ph, SMS, Viber, Twitter, LinkedIn, WhatsApp,
Instagram, and Facebook. Efren Ll. Cruz is a Registered Financial Planner and Director of RFP® Philippines, seasoned investment adviser, bestselling author of personal finance books in the Philippines and a YAMAN Coach™.
