FDI plunge reflects investment caution
From AB Capital's The Opening Bell: Three Moves
Event
Foreign direct investment (FDI) net inflows into the Philippines fell nearly 40% YoY to US$642mn in October 2025, according to central bank data. Cumulative FDI for Jan-Oct 2025 reached about US$6.2bn, down 24% YoY.
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We think the sharp drop underscores lingering confidence headwinds amid governance concerns and slower fiscal execution. Weak FDI aligns with softer GDP in 3Q25 and suggests private capex remains cautious. While Japan, the US, and Singapore still provide capital, the overall pullback signals investment risk aversion.
Catalyst
In our view, FDI may only recover if policy clarity, infrastructure momentum, and reform signals improve. A 25-40% rebound in confidence could lift annual FDI toward US$7-8bn in 2026, while continued uncertainty could keep inflows near 2025’s depressed base, limiting growth upside.
Action
Persistent FDI weakness adds a downside risk to capex-driven growth forecasts, keeping us cautious on industrial and construction exposure. We prefer sectors less dependent on foreign investment (i.e. utilities, consumer staples, REITs) and remain attentive to policy developments that might restore investor confidence.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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