With more than 100 million people, the Philippines is a very promising emerging economy. For those interested in investing in the Philippines, we analyze its most important stock market indices.
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Introduction
Southeast Asia is one of the most promising regions on the planet. And the Philippines one of its most prominent countries.
The Philippines is a country of more than 100 million people, with plenty of young, ambitious, and hard-working people. It enjoys political and financial stability. A recipe for economic success.
It has developed in a very significant way over the last few decades. Economic growth and solid public finances have made its currency, the Peso (PHO), one of the strongest since the beginning of the 21st century.
As a result, there are many reasons why we should be optimistic about the future of the Philippines.
For those who want to invest in the Philippines but do not want to pick individual companies, an ETF can be a very good option. In the next few sections, we analyze the 4 most important stock market indices in the Philippines.
PSE Composite
The PSE Composite, also known as PSEi, is the most famous stock market index in the Philippines. It is calculated and published by the Philippine Stock Exchange, located in Taguig, in the metropolitan area of Manila.
Introduced in 1980, the PSE Composite includes the 30 largest listed companies in the country. Thanks to this, it is a good indicator of how large Philippine corporations are performing. The index members are updated twice a year.
The 30 stocks are weighted according to their market capitalization adjusted for free float. To be part of the index, a company must have at least 15% of its shares listed on the stock exchange, which means a maximum of 85% can be in the hands of insiders such as founders and governments.
For those interested in all the details about the PSE Composite, here is the official link to the website of the Philippine Stock Exchange.
PSE All Shares
The PSE All Shares Index is the other major stock index calculated by the Philippine Stock Exchange.
Unlike the PSE Composite, which has only 30 companies, PSE All Shares is made up of all companies listed on the Philippine Stock Exchange.
As a result, it is the best indicator for the behavior of the entire corporate sector of the country, without focusing exclusively on its largest companies.
As you can imagine, the number of listed companies in the Philippines is slowly increasing, and there are already about 300 that can be found in the PSE All Shares index.
FTSE Philippines
The FTSE Philippines is another very useful index for those interested in investing passively in the Philippines.
Calculated by the FTSE Russell company, this index is composed of all Philippine companies that are part of the global FTSE All World Stock Index.
Because inclusion in the index is subject to minimum market capitalization and liquidity criteria, the exact number of companies within the index fluctuates over time. But we can usually find between 25 and 30 stocks in it. Consequently, the correlation with the PSE Composite is high.
The largest economic sector in the FSTE Philippines is real estate. For additional details, you can visit the FTSE Russell website.
MSCI Philippines
Finally, another way to invest in the Philippines with an ETF is to look for one that tracks the MSCI Philippines Index.
Very similar in its construction to the FTSE Philippines, the MSCI Philippines is composed of all the Philippine companies that are part of the global MSCI World Stock Index.
In this case, the exact number of stocks in the index also fluctuates over time. However, because the MSCI World has different eligibility criteria, the MSCI Philippines has just under 20 companies.
The largest sectors within the index are real estate and industrials. Here is the link to the MSCI website for additional information.
I hope you found this short analysis on Philippine stock market indices useful, and encourage you to subscribe to my newsletter:
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For information about indices in another promising emerging country, check out the following link:
Top 7 Stock Market Indices in India
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