When you hear “Philippine Stock Exchange Index” or PSEI, it sounds like the heart of local investing — the benchmark that supposedly represents the country’s biggest and best companies. But here’s the truth that many don’t talk about: most Filipino investors avoid the PSEI altogether.
Yes, even those who invest regularly prefer putting their money elsewhere — like US ETFs, Pag-IBIG MP2, or even cryptocurrency. The question is, why?
1. Historical Returns Aren’t That Exciting
Let’s start with performance.
Over the last decade, the PSEI has moved sideways more than it has gone up. Compared to global markets like the S&P 500 or NASDAQ, which have seen massive gains, the local index feels like it’s barely keeping pace with inflation.
- In 2015, the PSEI hovered around 7,000.
- In 2024, it’s still around that level.
That’s almost zero growth in nearly ten years — not exactly the kind of number that makes investors excited to stay.
2. Foreign Investors Keep Pulling Out
Another big factor is capital flight — when foreign investors continuously withdraw money from our market.
Foreign funds once dominated PSE trading, but in recent years, they’ve been moving their capital to stronger markets with better stability and returns.
As a result, liquidity drops, volatility increases, and local investors lose confidence. It’s a cycle that feeds itself.
3. Lack of Diversity in Listed Companies
The PSEI is made up mostly of banks, property developers, and conglomerates — sectors that are often hit by the same economic factors. There’s very little innovation-driven growth here.
Compare that to the U.S. market, where you can invest in companies like Apple, Nvidia, and Microsoft. In the Philippines, we don’t have an equivalent tech growth engine that excites investors.
So when Filipinos compare where to park their money, many realize: the local market simply doesn’t offer enough variety.
4. Retail Investors Find It Hard to Trust Local Stocks
Let’s be real — a lot of Filipinos got burned by “tip-based” trading.
There’s also the perception that the Philippine stock market favors insiders or those with better access to information. Transparency issues, slow reforms, and political uncertainties make retail investors even more hesitant to join in.
And with easy access to international platforms like eToro or GoTrade, investing abroad has never been simpler. Many Filipinos are now buying U.S. ETFs or blue-chip stocks with just a few taps.
5. The Peso Problem
Even if you make gains in local stocks, your returns are still in pesos — a currency that has been steadily weakening over time.
Meanwhile, if you invest in dollar-denominated assets, your investment value grows not only from the stock’s performance but also from peso depreciation.
That dual benefit is something the PSEI just can’t match.
What Filipinos Are Investing In Instead
Here’s where the money’s flowing now:
- Pag-IBIG MP2 for safe, government-backed returns.
- U.S. index ETFs like VOO or QQQ for long-term growth.
- Cryptocurrencies (still risky, but popular among younger investors).
- Real estate and REITs for income and inflation protection.
The trend is clear — Filipino investors want returns with visibility and growth potential, not volatility tied to a stagnant index.
Blogger’s Corner
I’m not saying the PSEI is bad. It still represents the core of our economy. But the data doesn’t lie — the Philippine stock market hasn’t rewarded patience the same way global markets have.
If you’ve ever felt like you’re missing out on better opportunities abroad, that’s not “FOMO” — it’s a rational observation of performance.
Until the PSE and our economy become more competitive, Filipinos will keep looking beyond our borders for better investment stories.