Contents:
- Introduction
- PSEi Market Situationer: February 2025 Outlook
- Current BETA Portfolio Analysis
- Recommended Adjustments for February 2025
- Final Portfolio Strategy for February 2025
Introduction
The Philippine Stock Exchange Index (PSEi) has officially entered bear market territory, declining by 22.4% from its recent high of 7,554 in October. This downturn is attributed to disappointing macroeconomic data and a major index rebalancing, leaving investors searching for catalysts to revive the market.
In light of these developments, it's crucial to reassess our BETA Portfolio to ensure it remains resilient and well-positioned for future market recoveries. Our strategy this month focuses on optimizing growth stock allocations, adjusting REIT positions, and maintaining defensive dividend stocks.
Optimizing the BETA Portfolio amid PSEi market downturn
PSEi Market Situationer: February 2025 Outlook
As of January 31, 2025, the PSEi closed at 5,862.59, marking its lowest level in over two years. This decline reflects the impact of a slowing economy, persistent inflation, and recent storms. Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., noted, "We were affected by sticky inflation, the impact of the storms and there appears to be no clear positive support for growth in 2025, except for the infrastructure spending of the government."
The recent index rebalancing, which saw the inclusion of China Banking Corp. and AREIT Inc., also contributed to market volatility. AP Securities Inc. research head Alfred Benjamin Garcia explained that the combined free-float weighted market capitalization of these new entries required adjustments across all index stocks.
Given these factors, opportunities will be selective. It's essential to focus on growth stocks demonstrating technical resilience, defensive dividend stocks for stability, and maintaining liquidity to capitalize on potential bullish reversals.
Current BETA Portfolio Analysis
Our BETA Portfolio is currently 98% invested, with only 2% held in cash, limiting our flexibility for opportunistic trades. The current allocations are:
Growth Stocks: 32% – Positioned for long-term appreciation but lacking confirmed breakouts.
REITs: 39% – Providing passive income but overweighted in a market where capital appreciation is uncertain.
Dividend Stocks: 27% – Defensive holdings offering stability amid PSEi volatility.
To optimize risk exposure, increase liquidity, and reallocate capital to high-conviction trades, we recommend the following adjustments.
