At the Crossroads: Why Philippine Equities May Be Nearing a Turn

In a quiet nook at the Westin Manila Ortigas yesterday morning, the conversation at the Monday Circle felt less like a market briefing and more like a meditation on choice.

Road Less Traveled: Mark A. Angeles, First Vice President and Head of Equity Research at First Metro Securities, speaks at the Monday Circle on why Philippine equities are at a crossroads and why taking the “road less traveled” may offer asymmetric upside for long-term investors.

At the center of that discussion was Mark A. Angeles, First Vice President and Head of Equity Research of First Metro Securities, who framed the Philippine equity market not as a problem to be solved, but as a crossroads to be understood.

Angeles is known among institutional investors for a temperament that blends discipline with optimism.

With nearly two decades of experience covering US, European, and Philippine equities, and as the architect of First Metro’s research partnership with DBS, he has developed a habit of looking for opportunity precisely when consensus is most fatigued.

That posture was evident in how he returned repeatedly to a simple idea inspired by Robert Frost’s familiar verse. Markets, like investors, eventually face a moment where staying on the well-worn path becomes a decision in itself.

Making up the audience yesterday morning were regular members of the Monday Circle, a twice-monthly gathering of senior bankers, fund managers, listed company executives, media, and policy practitioners.

Designed as an off-the-record forum for candid exchange, the Circle has become an unusual intersection where macroeconomics, markets, and governance are critically discussed.

That setting mattered. Members were given what Angeles described as “first dibs,” effectively premiere access to First Metro’s upcoming investor roadshow themes before they are rolled out more broadly to clients.

At the heart of the presentation was a reframing of Philippine equities. Angeles argued that the downside is increasingly bounded while the upside is not heroic in its requirements.

In First Metro’s base case, the PSEi muddles through toward roughly 6,500, supported by modest earnings growth and a weak but stable macro backdrop.

The bear case at 5,500, he emphasized, requires a genuine black swan on the scale of a global financial crisis or another pandemic.

The bull case at 7,500, however, does not require perfection. It hinges explicitly on governance reforms, economic recovery, and renewed foreign inflows.

This asymmetry underpins his optimism. Valuations are already deeply discounted relative to regional peers, with equity risk premia sitting well above historical averages.

For prices to fall meaningfully from here, conditions would need to deteriorate beyond what is already widely acknowledged. For prices to rise, the country merely needs to demonstrate competence.

Governance, Recovery, and Flows: market upside explicitly hinges on governance reforms, economic recovery, and renewed foreign inflows rather than heroic earnings assumptions.

Normalized public spending, clearer governance optics, and continued policy coordination between fiscal and monetary authorities would be sufficient to restore confidence.

Foreign flows occupy a central role in this narrative. Angeles noted that the Philippines remains structurally underowned and underweighted in emerging market portfolios.

Recent inflows have been driven largely by passive funds, but in a market as small as the PSE, allocation buying alone can move prices materially.

Conviction, in this context, is optional. Participation is enough.

From this two path setup flows First Metro’s recommended portfolio stance. Angeles described it as a "Barbell Strategy" designed to survive uncertainty while retaining exposure to recovery.

On one end sit dividend-paying defensives that offer cash flow and earnings visibility. These include Globe Telecom, Universal Robina, AREIT, Puregold, RL Commercial REIT, PLDT, and Meralco.

On the other end are large-cap cyclicals that stand to benefit disproportionately from improved sentiment and economic normalization, such as BPI, BDO, SM Investments, Ayala Land, and Jollibee Foods.

The Barbell Strategy pairs dividend-paying defensives with large-cap cyclicals while selectively positioning for AI diffusion winners amid a two-path market setup.

Between these two poles lies what Angeles called the unmarked trail. This is the space of AI diffusion winners, companies with high operating leverage to digital adoption rather than headline artificial intelligence hype.

In this category, he pointed to Converge ICT and SM Prime, names positioned to benefit quietly from data demand, connectivity, and changing consumer behavior.

It did not go unnoticed in the room that stalwarts like AboitizPower, DigiPlus, and ICTSI were absent from the list, a reminder that even high-quality franchises can fall outside a specific tactical framework.

Throughout the discussion, Angeles resisted both alarmism and complacency.

Political noise, including impeachment chatter, was treated as transient. Climate risk and true black swan events were acknowledged as real but unmodelable.

The central message remained intact. The Philippine equity market does not need a miracle. It needs steadier governance, normalized spending, and sustained foreign participation.

As the Monday Circle adjourned, the metaphor lingered. One road promises familiarity and low expectations. The other offers discomfort and the possibility of repricing.

Angeles made it clear where he believes the asymmetry lies. For investors willing to stand at the crossroads without fear of regret, the road less traveled may yet make all the difference.

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