The Philippine Stock Exchange Index, a major stock market index which tracks the performance of the most representative companies listed on Philippine Stock Exchange has come along way from 1987 to 2017.
After becoming one of the best performing stocks market in the world after the 1986 Edsa Revolution, the Philippine stock market’s run was halted by a series of military coup attempts.
What follows is a series of ups and downs due to developments both here and abroad.
Despite the market’s volatility the stock market has remained strong. Over this 33-year period of 1983 to 2015, the Philippine stock market had a compounded annual growth rate of 12.37 percent.
Unification and demutualization
The PSE traces its roots to 1927 when a group of American and Filipino businessmen formed the Manila Stock Exchange in the financial district of Binondo. In 1963, a second bourse, the Makati Stock Exchange was established in the newly developed financial area in Makati.
But in early 1990s, investor saw the unification of two exchanges to form the Philippine Stock
Then in early 2000, investors saw the demutualisation of the PSE, transforming the local bourse into a publicly-held corporation with diverse ownership governed by a majority of brokers and non-brokers.
The demutualisation aimed to eliminate the perception that the Exchange is an “old boys club”, to broaden ownership base, professionalize management and to improve corporate governance.
And while these changes are happening with the PSE, the stock market during the past two decades saw the market’s steep rise and steep decline.
How could forget the 1997 Asian financial crisis which severely affected every nation in the region as Asian stocks and currencies all dropped by more than 50 percent.
Many companies that have aggressively borrowed US dollars to finance their expansion plans found themselves in default as the rapid depreciation of the peso against the dollar has made it very difficult for them to pay their dollar debts.
And just about when companies were slowly recovering from the Asian financial turmoil, another crisis hit global markets including the Philippines.
The financial crisis of 2007–2008, also known as the global financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930.
It was on October 27, 2008 when the PSEi registered its biggest one day loss of -12.27 percent.
But it was after the global markets started to bottomed out in 2009, that emerging markets like the Philippines benefitted from the strong inflow of foreign funds.
Many foreign investors shifted their investments in emerging markets while economies of developed countries are still implementing measures to get their economies back on track.
Because of strong foreign inflow coupled to the domestic economy’s sustained growth, the PSEi notched an all-time high of 8,127.48 on April 10, 2015.