Why JPMorgan Sees the Philippines as a "Relative Winner" in Global Markets

JPMorgan Chase & Co. has upgraded Philippine equities to overweight from neutral, positioning the Southeast Asian nation as a "relative winner" in a world roiled by U.S. trade policies and global economic fragmentation. The call, led by strategists Khoi Vu and Jeanette Yutan, hinges on the Philippines’ structural insulation from external shocks—a rare quality in an age of escalating protectionism.

The Case for Domestic Resilience
The upgrade centers on the Philippines’ domestic economic orientation, which JPMorgan describes as the most pronounced in ASEAN. Unlike its neighbors—where manufacturing and exports dominate—the Philippine economy leans heavily on domestic consumption (accounting for ~70% of GDP) and services, including tourism and remittances from overseas workers. This structure, the strategists argue, shields corporate earnings from trade wars and global demand swings.

While the PSEi is currently down 5.5% year-to-date, JPMorgan’s revised 2025 target of 6,700 (down from 7,000) still implies an 8% upside from its current level. This cautious optimism reflects the firm’s broader outlook for 2025: a "year of divergence," where the U.S. economy thrives while China slows sharply and emerging markets face headwinds from currency volatility and higher-for-longer U.S. rates.

Global Turbulence, Philippine Advantage
JPMorgan’s thesis is steeped in geopolitical and macroeconomic context. U.S. President Donald Trump’s tariffs have disrupted global supply chains, favoring economies less reliant on exports. The Philippines, with its $40 billion annual remittance inflow (a lifeline for households) and fiscal policies prioritizing domestic spending, is uniquely positioned to withstand these pressures.

The strategists also highlight the services sector’s stability, which accounts for 60% of GDP and includes education, healthcare, and tech-driven industries. This contrasts with manufacturing-heavy ASEAN peers like Thailand and Malaysia, which are more exposed to trade disputes.

Caution Amid Optimism
The downward revision of the PSEi target—from 7,000 to 6,700—reflects JPMorgan’s acknowledgment of global macro risks. These include:
- A projected 1.5% GDP slowdown in China (its weakest since 1976).
- Policy divergences, such as the Eurozone’s rate cuts versus the Fed’s "higher-for-longer" stance, which could amplify financial fragmentation.
- Elevated inflation in goods sectors due to tariffs, even as services inflation moderates.

Yet the Philippines’ low external debt, high foreign direct investment, and youthful population (median age 24) provide tailwinds. Remittances alone are expected to grow by 3-5% annually, underpinning consumption.

Conclusion: A Calculated Bet on Resilience
JPMorgan’s overweight call is less about aggressive growth and more about relative safety in turbulent markets. The 8% upside to the PSEi target—despite the downward revision—is compelling, especially against a backdrop of ASEAN peers facing steeper declines. The Philippines’ domestic consumption engine, remittance resilience, and divergent fiscal policies (e.g., infrastructure spending) create a moat against global headwinds.

While risks like a deeper China slowdown or Fed overreach linger, the Philippines’ structural advantages make it a standout in JPMorgan’s 2025 "divergence" narrative. For investors seeking stability in a fractured world, Manila’s markets offer a buffered entry point into Asia—a bet on the power of going local in a globalized crisis.

In short, the Philippines isn’t just an "overweight" play; it’s a blueprint for navigating 2025’s choppy waters.