Political Crossroads: Navigating Philippine Equity Markets Amid Sara Duterte's Impeachment Trial

The impeachment trial of Philippine Vice President Sara Duterte has thrust the nation into a political crossroads, with far-reaching implications for equity markets and sector-specific investments. As the Senate's procedural delays and partisan maneuvering prolong uncertainty ahead of the 2028 elections, investors must carefully parse risks and opportunities across real estate, infrastructure, and consumer goods—while anchoring strategies in resilient blue-chip stocks aligned with President Marcos's governance legacy.

The Political Crosscurrents: Impeachment as a Catalyst for Instability

The trial's unresolved status has created a high-stakes game of political chess. A conviction would disqualify Duterte from the 2028 presidential race, consolidating power for the Marcos-Romualdez dynasty. An acquittal, however, would reignite Duterte's populist appeal, potentially fracturing the ruling bloc and destabilizing policy continuity. This uncertainty is already testing investor sentiment: the Philippine Stock Exchange Index (PSEi) has fluctuated between 6,300 and 6,500 in 2025, reflecting short-term volatility tied to geopolitical risks and legislative gridlock.

Sector-Specific Risks and Opportunities

Real Estate: Resilience Amid Oversupply Challenges
The sector's growth is underpinned by strong domestic demand, including remittances and foreign investment. Residential condo sales surged 90% year-on-year in 2022, driven by affordable housing initiatives. However, risks persist:
- Oversupply: Metro Manila's residential inventory stands at 75,300 unsold units, with an absorption period of 5.8 years.
- Office Vacancies: Vacancy rates could hit 22% by 2025, exacerbated by post-POGO withdrawal effects.

Opportunity: Developers focused on secondary cities and regional infrastructure (e.g., the Bataan-Cavite Interlink Bridge) may thrive. Marcos's “Build Better More” program, allocating PHP8.8 trillion to 198 projects, offers a buffer against Manila-centric oversupply.

Infrastructure: A Double-Edged Sword
The sector benefits from legacy projects like Duterte's “Build, Build, Build,” which has spurred rail networks and road expansions. Metro Pacific Investments Corp (MPIC), a key player in PPPs, is well-positioned to capitalize on Marcos's push for digital and energy infrastructure.

Risk: Prolonged impeachment-related gridlock could delay approvals for new projects. Investors should prioritize firms with diversified revenue streams and less reliance on government approvals.

Consumer Goods: Defensiveness in a Volatile Landscape
Consumer staples and utilities remain a safe haven. Companies like Ayala Land and SM Prime Holdings, with exposure to everyday essentials and resilient retail demand, offer stability.

Geopolitical Risks and Policy Paralysis

The trial's outcome could amplify geopolitical tensions. U.S.-Philippine relations, critical for trade and security, may face strain if Duterte's bloc adopts a more China-friendly stance post-acquittal. Meanwhile, U.S. tariffs on Philippine semiconductors—a key export—highlight vulnerabilities in trade-dependent sectors.

Investment Strategy: Prioritize Resilience and Policy Alignment

1. Overweight Blue Chips Aligned with Marcos's Agenda:
2. SM Prime Holdings (SMPH): Benefits from retail recovery and lower mortgage rates. Its residential segment offers growth as inflation eases.
3. Ayala Land (ALI): Insulated from POGO-related oversupply, with a discounted valuation and strong balance sheet.

4. Metro Pacific Investments (MPIC): A core holding for its exposure to infrastructure and digital transformation projects.

5. Underweight Politically Exposed Firms:

6. Sectors reliant on Duterte-aligned policies, such as mining or POGO-linked real estate, face heightened regulatory and reputational risks if the trial reignites political clashes.

7. Hedge with Defensive Plays and Short-Term Fixed Income:

8. Consumer staples (e.g., food and healthcare) and utilities provide ballast.
9. Philippine Treasury bills (e.g., 6-month T-bills yielding 2.05%) offer liquidity and downside protection.

Conclusion: Navigating the Crossroads

The Duterte impeachment trial is both a risk amplifier and an opportunity identifier. While policy paralysis could stall reforms and inflate equity volatility, sectors like infrastructure and real estate—backed by Marcos's legacy projects—offer durable growth. Investors must balance exposure to resilient blue chips with caution toward politically vulnerable firms, all while monitoring the trial's trajectory and its impact on 2028 election dynamics. In this crossroads, patience and sector-specific focus will be rewarded.

Final Note: The impeachment's resolution could redefine Philippine governance. For now, the path forward demands agility—and an eye on the horizon.