Investor sentiment in the country has deteriorated, with bears continuing to pull down the benchmark Philippine Stock Exchange Index (PSEi) to lows last recorded during the pandemic.

“This week, the local market is still seen to have a bearish default. The bourse could move down further as investors continue to contend with the lingering corruption issues here in the Philippines,” said Japhet Tantiangco, Research Manager at Philstocks Financial.

He added that offshore concerns, including worries over AI overvaluation and waning US Federal Reserve rate cut hopes, may further fuel the pessimism. This comes on top of already low confidence in the economy following dismal third-quarter gross domestic product (GDP) and foreign investments data.

Online brokerage 2TradeAsia.com echoed the sentiment: “Sentiment remains tethered to the Philippines’ deepening governance crisis, with explosive headlines on multibillion-peso flood-control graft scandals eroding investor trust and driving PSEi valuations back to pandemic-era troughs around 5,500.”

The firm noted that the Philippine peso’s plunge to all-time lows underscores a “decoupling failure,” amplifying volatility amid sticky inflation prints from key economies like the US and the Eurozone.

Furthermore, the third-quarter earnings season revealed broad-based softness in cyclical volume drivers. Common names in the consumer, property, and industrials sectors posted declines, attributed to subdued consumer spending, construction halts due to lower public spending, and typhoon recovery efforts.

However, 2TradeAsia.com suggested that a “muted but generally still positive earnings clip” does not justify the PSEi’s current 11 times forward price-to-earnings (P/E) multiple, especially with the fourth quarter historically boosting margins.

While political noise persists, the brokerage pointed to blue-chip resilience, which hints at selective rotation opportunities.

2TradeAsia.com cautioned: “With the PSEi having breached 5,500, funds may wisely pause until a firmer base emerges, yet this dip rewards patient allocators eyeing 2026 disentanglement. Expect range-bound trading while the index finds a stronger identity.”

In terms of stock picks, COL Financial has a BUY recommendation for Nickel Asia Corp. (NIKL) after its ore revenues exceeded the brokerage's expectations, prompting an upward revision of its earnings forecast.

“We remain positive on the long-term outlook for nickel due to the rising EV battery demand. In addition, we believe that NIKL’s expansion of its renewable energy (RE) power generation business comes at an opportune time as NIKL leverages the strong cash flow from its nickel mining business to diversify into other sectors,” COL Financial stated.

For its part, Unicapital Securities maintains a BUY rating for Aboitiz Power Corp. (AP) after revising the target price for the company’s shares upward by 15 percent following nine-month earnings that beat estimates.