Iran Conflict Jolts Global Markets, Aboitiz Power Illustrates Risks to Philippine Blue Chips

Explosions in the Middle East rarely stay confined to the battlefield. They travel through oil markets, interest rates, and investor sentiment—eventually reaching stock exchanges thousands of kilometers away.

That chain reaction is now visible in the Philippine Stock Exchange.

Aboitiz Power, among the most prominent energy firms listed on the Philippine Stock Exchange, emains a financial heavyweight in the sector, posting ₱33.7 billion in earnings in 2024 and ₱33.1 billion the following year. (Photo: AboitizPower)

The escalating military operations between the United States, Israel, and Iran—carried out under the codenames “Epic Fury” and “Roaring Lion”—have rattled global markets and interrupted what had been a promising recovery for Philippine equities.

After flirting with a climb toward the psychologically important 7,000-point level, the PSE index has drifted back near 6,300 as investors reassess geopolitical risks and the potential economic consequences of a prolonged Middle East crisis.

Market strategists often describe such shocks as “Black Swan” events, borrowing the term popularized by risk theorist Nassim Nicholas Taleb to describe sudden disruptions that markets fail to anticipate until they arrive.

But while indices capture the broad market reaction, the real test lies in how individual companies navigate the turbulence.

One instructive case is Aboitiz Power, among the most prominent energy firms listed on the Philippine Stock Exchange.

The company remains a financial heavyweight in the sector, posting ₱33.7 billion in earnings in 2024 and ₱33.1 billion the following year, supported by strong electricity demand across its generation and distribution businesses.

Energy sales in its generation and retail segment climbed 21 percent to 43,718 gigawatt-hours, while power distribution volumes rose 4 percent to 6,927 gigawatt-hours.

With roughly 6,770 megawatts of installed capacity, Aboitiz Power now commands nearly 24 percent of the country’s power generation market, giving it a dominant position in the Philippine electricity landscape.

Yet the energy business is among the most capital-intensive industries in the world. Building and expanding power infrastructure requires enormous investments, which companies typically finance through a mix of equity and debt.

As of early 2025, Aboitiz Power carried about $1.36 billion in foreign-denominated bonds, alongside domestic issuances that include a ₱30-billion retail bond offering in June 2025, the first tranche of its ₱100-billion bond program.

Those bonds carried interest rates ranging from 5.88 percent to 6.86 percent, with maturities extending to 2035.

In stable economic conditions, leverage allows energy firms to accelerate expansion without diluting ownership. But geopolitical crises can quickly shift the cost of capital as investors demand higher returns to compensate for uncertainty.

That dynamic is now being closely watched across global markets.

Fortunately, Aboitiz Power’s diversified generation portfolio—spanning hydroelectric, geothermal, solar, wind, and thermal assets—provides a degree of resilience.

The company is also expanding its renewable energy pipeline, targeting 3,700 megawatts of new renewable capacity by 2030, while exploring energy storage and LNG opportunities to support grid stability.

Still, the broader lesson of the Iran crisis is becoming increasingly clear for investors.

In a deeply interconnected financial system, geopolitical conflicts rarely remain regional.

They ripple through commodity markets, credit conditions, and investor psychology—ultimately shaping the fortunes of companies operating far from the battlefield.

And as global markets are once again discovering, distance offers little protection when capital moves at the speed of uncertainty.

___

ABOUT AUTHOR