Did you know that Philippine stocks were able to achieve an astounding growth of 800% in a span of 30 years?
From 1987 until 2018, the Philippine Stock Exchange index (PSEi) rose from 1,000 points to a peak of 9,000 points — generating a return of 800% over 30 years.
(The PSEi is an index comprised of 30 companies listed in the Philippine Stock Exchange (PSE) and is normally considered a barometer of the Philippine economy.)
This return means if you invested P100,000 in the PSEi back in 1987 and just left it there for 30 years, this money would be worth close to a million pesos in 2018!
From a mere 1,000 points in 1987 during the administration of Pres. Cory Aquino, the PSEi grew to its highest level of 9,000 points in 2018 during the term of Pres. Rodrigo Duterte.
Unfortunately, though, the momentum faltered starting 2018 and the index is yet to breach the 10,000 level until now.
By the end of the year 2021, the PSEi was at the 7,100+ level.
The chart below shows a rundown of when the PSEi achieved the 1,000 round-number breakouts in the past 30 years.
Highest PSEi Level in History: 9,078.37 points
The all-time high level reached by the PSEi was 9,078.37 points — an intra-day achievement recorded on Monday, January 29, 2018.
Just a week before that, on Friday, January 26, 2018, Philippine stocks closed at an all-time high of 9,041.20 points. This was also recorded as the highest-ever closing price of the PSEi in history.
Compare that with the PSEi’s level 30 years ago, on July 2, 1987, with the index hovering at just 1,000 points.
Going from 1,000 to 9,000 points is an 800% increase, so if you decided to invest P100,000 in the PSEi back then and opted to just leave your money there and did nothing afterwards, you’ll be surprised to know that, in 2018, your P100,000 would have been worth almost P1 million pesos, i.e., P900,000. Not bad!
Here are the exact dates of and the Philippine President during those PSEi breakout levels.
PSE Breakout Levels from 1,000 to 9,000
|PSEi Level||Date first reached||During the term of President|
|1,000||July 2, 1987||Cory Aquino|
|2,000||September 13, 1993||Fidel Ramos|
|3,000||December 23, 1993||Fidel Ramos|
|4,000||September 14, 2010||Noynoy Aquino|
|5,000||March 1, 2012||Noynoy Aquino|
|6,000||January 7, 2013||Noynoy Aquino|
|7,000||April 22, 2013||Noynoy Aquino|
|8,000||March 30, 2015||Noynoy Aquino|
|9,000||January 26, 2018||Rodrigo Duterte|
Stocks Performance under each Philippine President
Some interesting facts from the data above:
1. During the time of Pres. Cory Aquino, the first 1,000 breakout level of the PSEi was recorded on July 2, 1987, a little over a year after she assumed the presidency.
2. During the administration of Pres. Fidel Ramos, Philippine stocks achieved two new breakout levels just three months apart. The PSEi’s 2,000-point level was reached on September 13, 1993 while the 3,000-point level was reached on December 23, 1993.
3. During the administrations of Pres. Joseph “Erap” Estrada and Pres. Gloria Macapagal Arroyo (GMA), the PSE never reached any new 1,000-point milestone.
The sluggish performance of the Philippine stock market was partly due to market meltdowns resulting from the aftermath of the Asian financial crisis in 1997 (during Pres. Estrada’s term) and the subprime mortgage and global economic crisis in 2007 (during Pres. GMA’s term). Both major events imposed a heavy toll on Philippine stocks lasting almost two decades.
4. It took the PSEi a long 17 years, from 1993 to 2010, to increase by just 1,000 points from 3,000 to 4,000 level.
5. While it took the PSEi 17 years to go from 3,000 to 4,000, it only took less than two years to jump from 4,000 to 5,000 points. This happened during the administration of Pres. Noynoy Aquino when the local index grew from 4,000 in September 2010 to 5,000 in March 2012.
6. Philippine stocks managed to breach the 1,000-point hurdle five (5) times from the 4,000 level in 2010 to 8,000 level in 2015. During this time, under the term of Pres. Noynoy Aquino, the PSEi doubled its value from 4,000 to 8,000 points.
7. It took the local stock market index three years (from March 2015 to January 2018) to reach a new milestone from 8,000 to 9,000 points. The 9,000-point level was reached on January 26, 2018, almost two years into the administration of Pres. Rodrigo Duterte.
8. In 2020, Philippine stocks plummeted alongside global markets because of the COVID-19 pandemic. The PSE suffered its biggest one-day decline of -13.34% on March 19, 2020 following the national government’s announcement of lockdowns and mobility restrictions.
PSE Stocks Performance in 2021
At the last trading day of 2021, the index closed at 7,122.63 points.
The 1-year return of the PSEi in 2021 was -0.24%, relatively flat compared to the previous year 2020.
Best Performing Stocks (Top Gainers) in 2021
The top gainers or top 10 stocks with the biggest price appreciation in 2021 are as follows.
|Stock||Company||% Gain||Starting Price||Ending Price|
|1||EVER||Ever Gotesco Resources & Holdings||297.59%||0.083||0.33|
|4||GSMI||Ginebra San Miguel||115.53%||52.80||113.80|
|5||DELM||Del Monte Pacific Ltd.||113.77%||7.26||15.52|
|9||ALLHC||AyalaLand Logistics Holdings||82.38%||3.69||6.73|
|10||BKR||Bright Kindle Resources & Investments||76.84%||0.95||1.68|
Worst Performing Stocks (Top Losers) in 2021
Meanwhile, the stocks with biggest price declines in 2021 are as follows.
|Stock||Company||% Loss||Starting Price||Ending Price|
|1||SGP||Synergy Grid & Development Phils.||-94.44%||236.00||13.12|
|3||PHR||PH Resorts Group Holdings||-74.34%||3.04||0.78|
|4||C||Chelsea Logistics & Infrastructure Holdings||-70.36%||5.60||1.66|
|6||MM||MerryMart Consumer Corp.||-68.59%||7.99||2.51|
|7||NI||NIHAO Mineral Resources||-66.12%||3.04||1.03|
|8||DITO||DITO CME Holdings||-60.74%||12.86||5.05|
|9||MRC||MRC Allied Inc.||-58.87%||0.62||0.26|
|10||PHA||Premiere Horizon Alliance||-57.58%||1.32||0.56|
Closing Prices of PSEi every year
The table below shows the closing prices of the PSEi at the last trading day of the year from 2001 until 2021 and the corresponding 1-year return (profit/loss percentage).
|Year||Year-end Closing Price||PSEi 1-Year Return|
The data above shows that Philippine stocks generated an annual return of 9.46% over a 20-year period. Simply put, if you invested in the PSEi from 2001 to 2021, you would have earned 9.46% every year.
Again, not a bad performance, but to earn this, you’ll have to ride out both the bull and bear cycles of the stock market in that 20-year period.
Market Return of Philippine Stock Market
If you’re doing an equity research or valuation report, you may use this 9.46% as “Expected Market Return (rm)” of Philippine equities which can be plugged into your Capital Asset Pricing Model (CAPM) when using the Discounted Cash Flow (DCF) model.
The market return (rm) in CAPM represents the expected return of the investor from Philippine stocks, represented by the PSEi benchmark index.
Of course, it’s always better to use expected or forecasted market returns (i.e., forward-looking data) but if data is unavailable or you don’t feel confident to use your forecasted market returns, the historical performance of the stock market index, in this case the PSEi, may suffice.
The value of the market return (rm) will vary depending on the time horizon you’re considering. Based on the data above, if you’re to consider the 20-year period from 2001 to 2021, the expected market return or rm of the Philippine stock market which you can use in CAPM is 9.46%.
You may use the following table as guide if you plan on using a different time period for your expected market return (rm) of Philippine equities.
|Period||PSE Market Return (Rm)|
Shall we see a return of the PSEi to 8,000 or even 9,000 points in the next few months? More importantly, will the PSEi achieve a brand-new 1,000-point milestone at 10,000? Let’s hope it will come very soon!
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