Foreign investors shifted to net buying in the Philippine stock market over the last two weeks, enabling the Philippine Stock Exchange Index (PSEi) to break the 6,400 milestone that held for the last four months. The shift was driven by cooling US inflation pressures and proactive local central bank policies, according to analysts. Foreign fund flows account for over 50% of total value turnover on average in the Philippine market, making their directional moves critical to overall market performance.
Foreign Investors Target ICTSI and CNPF
Foreign investors favored International Container Terminal Services Inc. (ICTSI) and Century Pacific Food Inc. (CNPF) during the recent rally. ICTSI has been the market's primary engine, pushing the market higher for its high-growth structural expansions. CNPF is actively sought as a defensive consumer hedge against broader macroeconomic uncertainty. The last time the market broke the 6,400 level was four months ago on February 10, when it closed at 6,474.60.
US Economic Data Eases Global Inflation Concerns
The US Consumer Price Index (CPI) for June slowed to 3.5%, down from 4.2% in May. The US Producer Price Index (PPI) dropped by 0.3% in June. These figures eased global anxieties regarding aggressive US Federal Reserve policy, directly driving capital back into emerging markets like the Philippines. The downward shift in the US June producer price index sparked a global "risk-on" sentiment that redirected institutional capital away from safe-haven US assets.
BSP Raises Benchmark Rate to 4.75%
The Bangko Sentral ng Pilipinas (BSP) Monetary Board raised its benchmark reverse repurchase (RRP) rate by 25 basis points to 4.75%. BSP Governor Eli Remolona Jr. stated that the robust domestic economy can absorb an additional interest rate hike if needed to anchor inflation expectations. Philippine headline inflation slowed to 6.4% in June from 6.8% in May. The BSP's higher local interest rates, coupled with resilient overseas remittances, have stabilized the Philippine peso.
ICTSI Reports 23% Profit Surge in Q1
ICTSI's Q1 net profits surged by 23%, equivalent to US$293.57 million. A double-digit growth figure is projected in the net income and revenues of ICTSI for Q2. The company experienced an 11% surge in global container volumes and aggressive international hub expansions like the Durban Gateway Terminal in South Africa and Batu Ampar in Indonesia. A long-term extension of its Melbourne port concession until 2066 reinforces a multi-decade cash flow outlook.
For CNPF, the company is experiencing double-digit expansions across both its domestic and export markets. CNPF's earnings result for Q2 is scheduled to be reported on August 7, 2026. EPS is estimated to average at P1.82 apiece, based on analysts' forecasts. Executive chairman Christopher Po stated that the company expects to sustain a double-digit growth in revenue and profit for the full year despite supply chain challenges.
Market Declines on July 21 and July 22
The market fell on July 21 at the 6,333.80 level, down 81.92 points or 1.28% from a market transaction of P7.39 billion, excluding cross transactions. Trading was affected by the rise in oil prices by two digits that took effect within the day. On July 22, the market closed at 6,267.85, down 65.59 points or 1.04% on a total value turnover of P5.78 billion, excluding cross transactions. The decline was affected by upcoming index methodology changes that would trigger portfolio repositioning.
Analysts Assess Rally Sustainability
Jofer Gaite, vice president for sales of B.A. Securities, Inc., observed that "foreign inflows and retail investors are pushing the market higher, momentarily ignoring the US-Iran noise." He noted that headwinds of slower growth, tacky inflation, and elevated interest rates continue to challenge company revenues and profits. On a technical basis, "the market's rise is not broad-based but mainly due to ICTSI's fantastic run."
Joel de la Peña, market strategist and chief trader of H.E. Bennett Securities Inc., stated that while the market is only oversold, incomes of companies are getting better. He believes that the market may continue to rise as the economy grows albeit at a low pace due to high inflation.
Andro Leo "Andoy" I. Beltran, vice president and head of the Digital Solutions & Investor Engagement Division of First Metro Securities Brokerage Corp., stated that over the short term, investors are pricing geopolitical risk, leading to risk-off sentiment. Over the medium to long term, corporate earnings, interest rates, and economic fundamentals will have a greater influence on where the market will be.
Rene de los Reyes of Abacus Securities Inc. stated that the market has been "ridiculously" undervalued for the longest time, even though it is at present technically lifted by foreign interest in ICTSI, which has an assigned weight of 27% in the main index.
Reuben Mark A. Angeles, first vice-president and Equity Research Division head of FirstMetroSec, characterized the rally as "investors' fatigue on the Middle East issue." He recommends focusing on blue-chip conglomerates, steady dividend payers, and resilient consumer brands with high-volume, liquid stocks driven by strong price action, near-term catalysts, or index changes.
FAQ
What drove the Philippine stock market rally in the last two weeks?
Foreign investors shifted to net buying, driven by cooling US inflation pressures and proactive BSP monetary policies. The US CPI for June slowed to 3.5% from 4.2% in May, and the US PPI dropped by 0.3% in June, easing concerns about aggressive US Federal Reserve policy.
Which companies did foreign investors favor during the rally?
Foreign investors favored International Container Terminal Services Inc. (ICTSI) and Century Pacific Food Inc. (CNPF). ICTSI has been the market's primary engine due to high-growth structural expansions, while CNPF is sought as a defensive consumer hedge against macroeconomic uncertainty.
What actions did the BSP take regarding interest rates?
The BSP Monetary Board raised its benchmark reverse repurchase (RRP) rate by 25 basis points to 4.75%. BSP Governor Eli Remolona Jr. stated that the economy can absorb an additional interest rate hike if needed to anchor inflation expectations.
