Benise Balaoing

Philippine Stock Exchange in Taguig City.  Mark Demayo, ABS-CBN News

Article (news)

Raine Musñgi

ABS-CBN News

<p>MANILA -- The Philippine stock market is being pulled into what one market strategist described as a global “liquidity black hole” driven by the artificial intelligence boom in the United States. </p><p>That&#x27;s even as local regulators move to overhaul trading rules to deepen activity in the Philippine Stock Exchange.</p><p>DragonFi Securities CEO Jon Carlo Lim said the PSE’s recent weakness is not an isolated domestic issue, but part of a broader global rotation of capital toward a narrow group of AI-linked U.S. stocks.</p><p>“The AI and AI-adjacent play in the U.S. is like a black hole sucking out all liquidity from the different exchanges,” Lim said on ANC’s Market Edge. </p><p>He pointed to extreme market concentration in the U.S., where a small group of tech giants continues to dominate returns.</p><p>“What this shows you… every time it becomes very, very concentrated in the AI-adjacent names, the Philippine Stock Exchange actually underperforms,” he said. </p><p>Lim added that participation in broader U.S. markets has also weakened, underscoring how narrow the rally has become.</p><p>“Post the Iran conflict… you&#x27;re talking about 75 percent of the S&amp;P 500 underperforming the S&amp;P 500 index,” he said.</p><p>For Lim, the implication is blunt: global capital is increasingly being absorbed by AI-heavy names, leaving emerging markets like the Philippines struggling to compete for inflows.</p><div><br/></div><div><strong>No strong catalyst yet for PH rally</strong></div><p>Despite recent market resilience, Lim said the local market still lacks a strong fundamental driver for a sustained upswing.</p><p>“If you… would have the flood control scandal, the hyperinflationary environment caused by the Iran conflict, and the Senate brouhaha, that the PSE would be flat for the year, I’d actually be very pleasantly surprised,” he said. </p><p>“Given the backdrop… I really don’t think that we really have a fundamental catalyst for an enduring rally to the upside.&quot;</p><p>The Philippine Stock Exchange, however, has been pushing a series of structural reforms -- including revamping trading rules, improving liquidity mechanisms, and strengthening market participation -- in a bid to address long-standing concerns over thin trading and weak depth.</p><p>But Lim suggested these measures may take time before materially shifting sentiment.</p><div><br/></div><div><strong>PSE reforms vs reality of thin liquidity</strong></div><p>While regulators work on market upgrades, Lim said liquidity remains the core issue holding back the local bourse.</p><p>“Obviously any lapse in corporate governance will naturally increase the apprehension of foreign investments,” he said.</p><p>“But I believe the real culprit is liquidity.”</p><p>He noted that capital continues to flow toward markets with stronger risk-adjusted returns, reinforcing structural weaknesses in the Philippines.</p><p>“It’s also pointing out how there’s a lot of fund flows out of our markets and into markets with a higher risk-adjusted profile,” he said. </p><div><br/></div><div><strong>Defensive stocks still winning</strong></div><p>Within the local market, Lim said performance remains heavily concentrated in defensive names.</p><p>“Essentially it’s really the dividend growth players… the essential utilities along with the transports being ICT,” he said. </p><p>“These are the companies with clear earnings visibility and with still an attractive dividend profile.”</p><div><br/></div><div><strong>Offshore investing debate heats up</strong></div><p>Lim also raised a more controversial point: whether limiting Filipino investors’ access to global markets could be worsening long-term wealth outcomes.</p><p>“I really believe that our regulators’ stance on denying access to Filipinos, direct access to U.S. stocks is inimical for the long-term health of our economy,” he said. </p><p>He warned that such restrictions may backfire.</p><p>“The medicine is actually worse than the disease,” he said. </p><p>Lim argued that capital naturally flows to where returns are strongest, and tighter restrictions may simply push investors offshore through indirect channels.</p><p>“Capital will always find its most productive use… or the asset with the highest risk-adjusted return,” he said. </p><div><br/></div><div><strong>Bigger question: reform enough to compete?</strong></div><p>The Philippine Stock Exchange’s ongoing revamp of trading rules and liquidity mechanisms reflects growing urgency to deepen the market and attract participation. But Lim’s assessment suggests a harder reality: structural reforms at home are competing against a global capital cycle dominated by AI-driven mega-caps.</p><p>For now, the Philippines remains caught between reform efforts on the ground -- and an external market force pulling liquidity elsewhere.</p><p>Catch the full interview with Jon Carlo Lim on Market Edge and on YouTube with ANC 24/7.</p><div><span class="fr-video fr-deletable fr-fvc fr-dvb fr-draggable" contenteditable="false" draggable="true"><iframe width="640" height="360" src="https://www.youtube.com/embed/YWYAVmj2ybs?autoplay=1&amp;wmode=opaque&amp;rel=0" frameBorder="0" allowfullscreen="" class="fr-draggable"></iframe></span><br/></div><div> </div>

<p>The Philippine stock market is being pulled into what one market strategist described as a global “liquidity black hole” driven by the artificial intelligence boom in the United States.</p>

The Philippine stock market is being pulled into what one market strategist described as a global “liquidity black hole” driven by the artificial intelligence boom in the United States.

AI 'black hole' draining PSE; liquidity reforms may not be enough -- DragonFi CEO

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AI 'black hole' draining PSE; liquidity reforms may not be enough -- DragonFi CEO

Raine Musñgi,

ABS-CBN News

Published June 05, 2026 06:54 PM PHT

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