Philippine Equity Strategy: Balancing tactical upside and macro constraints

研报英文原文证据摘录

Philippine Equity Strategy: Balancing tactical upside and macro constraints

Global Research

26 June 2026ab

Philippine Equity Strategy Equity Strategy

PhilippinesBalancing tactical upside and macro constraints

John Te, CFA

Analyst

We recommend a barbell positioning strategy in 2H26 john.te@ubs.com

+632-8784 8814

We set our PSE Index target at 6,500, based on 10x 2027E PE, or 7% above current

levels. While a US-Iran peace deal could unwind risk premiums, we think the rare Grace Lim

Economistconvergence of low growth, El Nino-driven inflation and political uncertainty likely limits

grace-k.lim@ubs.com

a sustained rally, despite 20-year low valuations. We expect flat EPS in 2026. We are +65-6495 5965

tactically OW banks and consumer ahead of potential peak rates by 3Q26, while adding

a modest defensive tilt absent a structural catalyst. BDO, BPI, JFC, MONDE, MER and Mica Abaquita

MYNLD screen as our top undervalued ideas. We present five pivotal questions:

mica.abaquita@ubs.com

How will the PSE Index perform under high rates and weak growth? +632-8784 8827

Tightening cycles in 2018 and 2023 saw the index decline 11% in each period. Gabriel Madrid

Our regression suggests a 100bp increase in 10Y yields reduces PSEi returns by Analyst

6%. With the index (ex-ICT) down 10% in 1H26, alongside dividend support, light gabriel.madrid@ubs.com

foreign positioning, and a final 25bp hike expected in 3Q26, we see limited scope +632-8784 8884

for meaningful drawdown. Aakash Rawat, CFA

How should investors position across the tightening cycle? Banks and aakash.rawat@ubs.com

consumer have typically begun to outperform at least six months ahead of peak +65-6495 8283

rates - we look to tactically OW these sectors. We do not expect material utilities

Claire Long