A P1.7 trillion plunge in Philippine stock market value over three weeks has ignited a sharp divide between regulatory data and political messaging, with Securities and Exchange Commission (SEC) Chair Francis Lim warning of a confidence crisis rooted in corruption while Malacañang dismisses the figures as “fake news.”
SEC Sounds Alarm: Integrity, Not Earnings, Driving Investor Exodus
At a public forum, Lim cited the flood control project scandal as a flashpoint for investor flight, saying the market rout occurred “despite rising corporate earnings.” According to SEC data, the Philippine Stock Exchange Index (PSEi) dropped by nearly 7% from mid-September to early October, erasing P1.7 trillion in market capitalization.
“Investors aren’t fleeing because of weak fundamentals; they’re fleeing because of weak integrity,” Lim said. “Corruption is a weapon of mass wealth destruction.”
Lim noted that the Philippine capital market now lags behind regional peers, with IPO activity slowing and delistings rising.
He emphasized that restoring trust is the SEC’s top priority, announcing reforms to improve transparency, compliance, and investor protection.
Political Pushback: Malacañang Counters With Investment Pledges
Special Assistant to the President for Investment and Economic Affairs Frederick Go rejected Lim’s warning, calling it “fake news.” He pointed to ongoing investment pledges, including a $1 billion Korean project under the CREATE More Act, as evidence of economic resilience.
“The pledges continue to come in,” Go said, without addressing the SEC’s market data or investor sentiment indicators.
Sector Breakdown: Financials, Infrastructure, and Real Estate Hit Hard
Analysts from AP Securities and BPI Trade report that the biggest losses were concentrated in:
– Banking and Financials: Down 9.2%, amid concerns over exposure to politically linked projects.
– Infrastructure and Construction: Slumped 11.5%, with investors wary of regulatory scrutiny and project delays.
– Real Estate and Property Development: Fell 8.7%, driven by fears of capital flight and declining demand.
Earnings vs. Trust: The Disconnect
Despite strong Q3 earnings reports from major firms like Ayala Corp. and SM Investments, foreign net selling surged to ₱42 billion in September alone, according to PSE data. Local fund managers also trimmed positions, citing “headline risk” and “governance uncertainty.”
“Markets are pricing in reputational risk,” said economist Mia Santos of First Metro Asset. “It’s not about GDP growth—it’s about credibility.”
Data Demands Accountability
While political officials tout investment pledges, the numbers tell a different story. The P1.7 trillion market loss is not a speculative claim; it’s a measurable erosion of wealth and trust. As reforms roll out and scandals unfold, the Philippine capital market faces a defining test: can transparency outpace denial? (ZIA LUNA)
