The peso’s weakness could give long-term investors a chance to pick up quality Philippine stocks at cheaper valuations, provided currency depreciation has not damaged the underlying business, according to Manulife Investments Philippines.
Market selloffs driven by a weaker peso can drag down companies whose fundamentals remain intact, creating potential entry points, Manulife Investments Philippines Head of Equities Elle Jamil said.
“If those fundamentals remain intact and the decline is largely the result of broader risk-off sentiment or foreign selling, peso-driven weakness can create attractive entry points,” Jamil said.
Investors should examine a company’s foreign-currency debt and hedging, reliance on imported inputs, pricing power and whether its revenues provide a natural hedge against depreciation.
Companies earning primarily in pesos while carrying significant dollar-linked costs or unhedged foreign debt are more vulnerable to margin and balance-sheet pressure. Those earning foreign currencies while keeping much of their costs in pesos could benefit.
Jamil cautioned that a falling share price does not automatically signal a bargain.
“If depreciation structurally compresses margins, increases leverage or weakens the company’s ability to reinvest, then the lower valuation may simply reflect a deterioration in intrinsic value,” he said.
Peso weakness can also weigh on foreign demand for Philippine equities because overseas investors measure returns in their home currencies, potentially amplifying market declines.
For long-term investors, Jamil said the key is determining whether currency weakness is merely dragging down a stock’s price or eroding the value of the business itself.
