Potential Price Decline Risks for the Philippine Stock Market in 2025
Most market expectations are that the Philippine stock market may rise in 2025, but I believe there is also a risk of decline at the same time. Here are the reasons:
1. Trade War
The impact of protectionism under the policies of US President Donald Trump is significant. Concerns about how global trade and investment restrictions will affect emerging markets like the Philippines have been the focus of investors since the end of 2024.However, it should be noted that the Philippines was able to weather President Trump's first administration without serious disruption. In the first year of President Trump's first term (January 20, 2017 to January 20, 2021), the PSEi rose 18% despite the imposition of tariffs on imports from China.
2. Slowdown of the Philippine Economy
The GDP growth rate for the fourth quarter of 2024 was lower than expected, following severe damage to agricultural production caused by bad weather at the end of 2024 and significant impact on the service industry.The Bangko Sentral ng Pilipinas (BSP) announced that economic activity will slow due to global inflation, and the Philippine economy may grow slower than previously expected in 2025 and 2026, settling near the lower end of the government's target of 6-8%.
3. Geopolitical Risk
If geopolitical risk increases, it may lead to a rise in commodity prices such as crude oil and currency fluctuations, which may negatively impact corporate investment activities and individual consumer sentiment. This will greatly affect investment decisions.The stock market will be particularly sensitive when the seeds of conflict become reality, causing market turmoil.
4. Exchange Risk
Following the decision to inaugurate President Trump in October 2024, the US 10-year bond and US dollar index rose, and the PSEi fell 20% by the end of January.For this reason, investors must understand that the US 10-year bond and US dollar index are inversely correlated with the Philippine stock index, and the Philippine stock index will fluctuate depending on the movement of the US 10-year bond and US dollar index.
What I want you to understand is not necessarily the optimistic hope that stock prices will continue to rise in 2025 and you will earn high returns, but also to be aware that there is a risk of losing money in a falling market.
Next, I would like to share some personal stories of people who have actually suffered large losses in stock trading.
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