Foreign flows now drive PH stocks–FirstMetroSec
Foreign money—not domestic fundamentals—is now steering the Philippine stock market, according to a research note by First Metro Securities Brokerage Corp. (FirstMetroSec), distributed by DBS Bank.
In its Feb. 13 report distributed by DBS Bank, FirstMetroSec said Philippine equities are being re-rated largely on global emerging market (EM) allocation flows. Year-to-date foreign inflows have exceeded $300 million.
The brokerage said the sharp pickup in January marked a decisive shift in foreign participation. This pushed rolling 52-week flows back into positive territory.
Notably, active fund outflows have reversed, contributing $21 million so far this year. This is an indication that the earlier de-risking phase may be ending.
However, the bulk of inflows has come from passive funds, particularly US-domiciled global emerging market funds.
FirstMetroSec described this as following a “yellow brick road” dynamic—rules-based EM allocations driven more by global narratives than by local macroeconomic or political developments.
This explains why investors have largely looked past domestic noise and instead focused on broader EM currency trends. Foreign buying concentrated in large-cap index names.
While visibility beyond the next two months remains limited due to sensitivity to global risk appetite, the brokerage sees several factors that could sustain inflows. These include a constructive outlook for emerging markets, expectations of further US dollar weakness supporting EM currency appreciation, and persistent underweight positioning among foreign funds.
If foreign flows remain robust, FirstMetroSec said the market is on track to reach its 7,500 bull-case target by year-end.
