The Philippine stock market benchmark index PSEi plunged 2.89 percent on the last trading day of 2021 to 7,122.63. This drop pulled the index to slightly lower than its 7,139.71 close in 2020 when the market was also reeling from the impact of the pandemic.

The All Shares index shed 10.6 percent year to date, after it ended the year at 3,818.12 points. Daily average value turnover for the year was at Php9.00 billion, up by 22.5 percent from 2020’s Php7.35 billion average.

Despite this though, 2021 was a much better year for the Philippine stock market as it was marked by the Philippine Stock Exchange’s biggest initial public offering in its history while capital raising activities also reached a record high.

COVID-19 continued to set the tempo for the performance of the stock market in 2021 as share prices crashed and recovered whenever there is a surge in cases or when investors cling to hopes that it will be over soon.

Also a big factor in the performance of the stock market is investors’ perception of how well the country is dealing with the COVID-19 situation and how long before the local economy is seen to recover in comparison to its neighbors in the region.

As Philippine recovery is seen to lag behind its neighbors, this is also reflected in the PSEi’s performance among ASEAN bourses: it is the second worse performing stock market in the region for 2021, with Malaysia at the bottom of the rung while Indonesia, Thailand, Vietnam, and Singapore were all up.

Foreign investors were net sellers by P2.32 billion, narrower than the P128.57 billion net foreign selling in 2020 when global markets panicked as COVID-19 became a pandemic.

Foreign investors were also responsible for 36.1 percent of the trading value turnover, while the rest were accounted for by their local counterpart.

“For 2021 we started on an optimistic tone and this is because of the hope that we will have a swift vaccination campaign and this will put COVID-19 under control so the Philipppines’ economic recovery will continue pick up,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

However, he noted that these hopes were dashed because the country’s vaccination program was off to a slow start because of the low amount of vaccine secured by the government.

“The Philippines had one of the longest lockdowns in the world during the pandemic. As the Philippines experienced the infectious Delta variant, COVID cases surged in the third quarter of 2021 which slowed the pace of recovery,” said Regina Capital Development Corporation Managing Director Luis Limlingan.

He noted that, “Vaccination rollout suffered delays initially due to supply constraints. The accelerated oil prices and inflation became big concern amidst the lingering global and local uncertainties.” This was made worse by the resurgence in COVID-19 cases in May which led to reimplementation of more stringent lockdown measures, particularly in the National Capital Region and its surrounding provinces.

Limlingan said The PSEi reached its 52-week low of 6,080.94 in May.

“The market fell in May because of the surge in COVID-19 cases. It tried to rise but recovery was again cut short because of the spread of the deadlier Delta variant which led to the reimposition of quarantine measures. This turned market direction south and led to the drop in July,” recounted Tantiangco.

Later in the third quarter, the market started to climb and reached its peak for the year as the country seemed to have gained more control over COVID-19 and as the vaccination program started to gain pace.

This led the economy to perform better than exected in the third quarter. Corporations were also showing robust results in the third quarter as the economy started to reopen.

The PSEi hit its 52-week high of 7,475.75 in November, said Limlingan who added that, “In the latter part of the year, fears have fueled on the highly transmissible Omicron variant.”

In December, the market’s climb started to stall again over concern over the rapid spread of the Omicron variant overseas and this eventually led the PSEi to give up the year’s gains after it fell on the last trading day of the year when another surge, this time fueled by the Omicron variant, is feared.

Despite all of these though, Limlingan said “the Philippine stock market still had a positive year as more firms set capital raising activities.”

The Philippine Stock Exchange registered a new record for capital raised in the stock market at P234.48 billion in 2021, breaking the previous high of P228.33 billion in 2012, on the back of the biggest initial public offering (IPO) in the history of the Exchange and real estate investment trust (REIT) listings.

For the year, the PSE had eight IPOs, 11 follow-on offerings, four stock rights offerings and eight private placements.

“We are pleased that more companies chose to raise funds through the PSE. Their confidence in the stock market made it possible for us to achieve this record capital raising number,” said PSE President and CEO Ramon S. Monzon.

A surge in retail investor participation was also logged in 2021 at 31.1 percent, from 18.2 percent in 2019 and 26.9 percent in 2020.

“The active participation of local retail investors will likely continue to next year especially as we expect the upcoming IPOs to attract new investors. While this is a much welcome development, we also hope to see the gradual return of foreign funds to the Philippine stock market,” Monzon added.