The Philippine Stock Exchange index (PSEi) is poised to reclaim the 7,000 level this year as the central bank’s pivot toward monetary easing and sweeping expansion of real estate investment trust rules draw investors back to local equities.

Investment & Capital Corporation of the Philippines (ICCP) President and Chief Executive Officer Jesus Mariano Ocampo said on Tuesday, Jan. 19, that they expect the benchmark gauge to benefit from a “catch-up” phase after trailing regional peers.

The optimistic outlook for 2026 hinges on a more stable macroeconomic backdrop and cooling inflation environment that is expected to bolster household consumption and corporate margins

“We are cautiously optimistic for the market, maybe looking at the PSEi hitting 7,000 for 2026, bearing no big negative surprises,” Ocampo said.

While the broader trend points upward, Ocampo warned that the market faces a potential reality check as companies begin reporting full-year 2025 earnings.

He noted that corporate results might “surprise on the downside” following the slowdown in business activity during the latter part of last year, which was marred by reports of corruption and administrative disruptions. Such headwinds could trigger bouts of profit-taking even as the long-term recovery remains intact.

According to Ocampo, the significant catalyst for the market’s performance will be the evolution of the Philippines’ energy mix as ICCP expects energy costs to stabilize or decline as a wave of renewable energy projects begins commercial operations this year.

This shift toward non-fossil fuel-based energy is viewed as a structural positive for both industrial productivity and consumer spending power.

“Starting this year, we will see a lot of the renewable energy projects coming online. That should have a positive impact on energy costs overall,” Ocampo said.

He added that the capital markets are also set to benefit from a regulatory tailwind, particularly the recent moves by the Securities and Exchange Commission to broaden the scope of real estate investment trust-eligible assets.

By moving beyond traditional office and retail spaces, the regulator has opened the door for the securitization of tollways, water systems, data centers, telecom towers, and fiber optic networks.

This “infrastructure-biased” regulatory shift allows companies to recycle capital more efficiently into high-capital-expenditure projects.

Reflecting this improved sentiment, ICCP is tracking four initial public offerings in the current pipeline. That would represent a doubling of activity compared with the two listings recorded last year.

Beyond REITs, the deal flow is expected to be driven by firms in the construction, retail, and renewable energy sectors.

With yields on fixed-income instruments retreating, Ocampo said it is an opportune time for investors to increase their exposure to the stock market.

He recommended that investors consider allocating approximately 20 percent of their portfolios to equities while retaining a portion in cash to capitalize on market dips.

As bankers and advisors temper valuation expectations, Ocampo noted that more "upside" is being left on the table for incoming investors, supporting a more sustainable recovery for the local bourse.