For most people, the most dangerous self-delusion is that even a falling market will not affect their stocks, which they bought out of a canny understanding of value—Leon Levy
In this issue
PSEi 30: The ICTSI Show
I. PSEi’s 30 Regional Outperformance
II. Misleading Index Performance (MSCI World, KOSPI)
III. The Ideological Foundation
IV. How Does This Relate to the PSEi?
V. One Stock, One Index
VI. Volume, Float, and the Shape of the Market
VII. The Intraday Pattern
VIII. Participation Collapse and Capital Consumption
IX. Conclusion: A Late-Cycle Signal
PSEi 30: The ICTSI Show
How concentration, liquidity, and selective speculation are reshaping the Philippine benchmark
I. PSEi’s 30 Regional Outperformance
Amid simmering political controversy over control of
Senate leadership—which will ultimately oversee the forthcoming impeachment
proceedings against the Vice President—the Philippine Stock Exchange Index
(PSEi) emerged as Asia’s top-performing equity benchmark for the week, rising
2.94%.
Figure 1
This occurred against an otherwise weak regional backdrop. Rising sovereign yields and continued geopolitical uncertainty weighed on sentiment, leaving most Asian bourses under pressure. While a few benchmarks—such as Japan’s Nikkei, Singapore’s STI, and Taiwan’s Taiex—briefly touched intraweek highs, softer closes erased much of the momentum. Indonesia’s sharp correction and weakness in South Korea’s KOSPI dragged broader regional averages lower. (Figure 1, upper window)
Yet headline index performance can mislead.
II. Misleading Index Performance (MSCI World, KOSPI)
Indices are not neutral reflections of reality; they are constructed representations shaped by methodology, market capitalization, and momentum. They measure a perspective.
Take the MSCI World Index. The MSCI World purports to track 23 developed markets, yet the US now accounts for roughly 72.45% of the benchmark, with information technology alone at 30.6% and financials at 15.33%. (Figure 1, lower image)
In practice, the MSCI World has become a proxy for US mega-cap tech. The label has quietly decoupled from what's actually being measured.
Figure 2
South Korea's KOSPI presents a more dramatic case. Samsung and SK Hynix—dominant in global memory chip supply—recently comprised more than half the KOSPI's market capitalization, piggybacking on the speculative melt-up in US AI stocks. (Figure 2, upper diagram)
SK Hynix joined the trillion-dollar club in late May. The consequence: the KOSPI's headline performance increasingly reflects two companies, not the broader market nor the national economy.
The dislocation is visible in the underlying data. The Korean won hit an all-time low last week as bond yields climbed—a sharp divergence between price signals and fundamental conditions.
Market breadth confirms the distortion: stocks hitting new lows spiked even as those hitting new highs continued to fade. (Figure 2, lower visual)
As liquidity becomes more selective, capital crowds into
a narrowing set of perceived winners. Momentum attracts momentum. FOMO and
greater-fool dynamics amplify upside moves, especially when leverage enters the
system. The result is not broad-based prosperity but increasingly concentrated
leveraged speculative blowoffs.
Figure 3
China offers a parallel. Margin financing has surged to levels exceeding those seen during the 2015 equity boom, even as the Shanghai Composite remains below its prior peak. Reaching lower index highs despite greater leverage suggests diminishing returns from credit-fueled speculation: progressively more debt is required to generate the same market effect. (Figure 3)
Rising concentration, speculative blowoffs, and record leverage: these are not isolated anomalies. They are convergent signals of late-cycle excess.
III. The Ideological Foundation
This matters because modern central banking increasingly views asset prices as transmission mechanisms of economic policy.
The logic is straightforward: higher asset prices generate wealth effects, encourage borrowing, support collateral values, and stimulate spending. In this framework, liquidity injections and policy backstops become implicit supports for financial assets.
Former Federal Reserve Chair Ben Bernanke summarized this philosophy in the aftermath of the dot-com era:
There’s no denying that a collapse in stock prices today would pose serious macroeconomic challenges for the United States. Consumer spending would slow, and the U.S. economy would become less of a magnet for foreign investors. Economic growth, which in any case has recently been at unsustainable levels, would decline somewhat. History proves, however, that a smart central bank can protect the economy and the financial sector from the nastier side effects of a stock market collapse
That single quote explains the architecture that
followed: the successive rounds of monetary accommodation, the reflexive
backstops, the tolerance for leverage—all premised on the belief that a
competent central bank can contain the fallout from any speculative excess it
helped create. Markets did not merely become politicized. They became instruments of policy, kept elevated by design.
IV. How Does This Relate to the PSEi?
The Philippine market increasingly displays similar
characteristics.
Figure 4
The long-term divergence between the PSEi and International Container Terminal Services Inc. (ICTSI) has become difficult to ignore.
Since the PSEi peaked in 2017 and entered a prolonged period of stagnation—a bear market, ICTSI has continued to surge, with recent price action increasingly resembling a parabolic advance. (Figure 4, upper window)
As ICTSI reached a record high of Php 875 on June 3, its weight in the PSEi climbed to roughly 25.5%. (Figure 4, lower chart)
The implications are significant.
V. One Stock, One Index
For the week, the PSEi gained a net 169.72 points, or 2.94%. Yet ICTSI alone contributed approximately 177.63 points to the index. Put differently, ICTSI accounted for more than 100% of the benchmark’s weekly advance (gross), while the remaining components collectively added little or acted as offsets.
The broader composition of returns reinforces this
imbalance.
Figure 5
Across the PSEi’s 30 members, average weekly performance was only around 0.12%, with 16 issues actually posting losses. Although four of the biggest market cap issues advanced, ICTSI’s 13.62% surge overwhelmingly dominated benchmark performance. (Figure 5, topmost pane)
Even outside the benchmark, the divergence becomes evident. The broader All Shares Index rose only 1.63%, while aggregate market capitalization increased 2.17%—both materially below the PSEi’s gain.
Year-to-date performance paints an even starker picture: ICTSI’s share price has surged by 50.8%, while 22 of the 30 listed issues have declined. Remarkably, ICTSI’s strong gains have helped compress overall market losses to an average of just 6.7%! (Figure 5, middle chart)
VI. Volume, Float, and the Shape of the Market
Liquidity concentration tells a similar story.
ICTSI accounted for roughly 29.5% of main board trading volume during the week, exceeding 32% in the final three sessions.
Foreign buying represented around 9.3% of ICTSI turnover.
Yet in today’s financialized system, “foreign buying” deserves nuance: overseas registration does not necessarily imply independent foreign institutional capital, as such flows may also reflect affiliates, intermediaries, or networked financial structures linked to domestic interests.
Broker concentration adds another layer. The top ten brokers accounted for an average of approximately 64% of main-board turnover, underscoring the degree to which market activity remains concentrated among a relatively narrow set of big cap issues.
This raises a fundamental question about representation.
The PSEi 30 is intended to track the performance of the country’s 30 largest and most actively traded listed firms and is commonly treated as a barometer of Philippine business conditions.
Yet context makes the weight anomaly stranger still: ICTSI ranks 16th among PSEi 30 constituents by published assets—Php 568 billion as of Q1 2026. It is not the largest company in the index.
It is simply the one commanding the most speculative attention or one company has increasingly come to define the behavior of a benchmark meant to represent an entire market.
Notably, unlike the AI-driven concentration seen in global technology benchmarks, there is little evidence of comparable speculative spillover among ICTSI’s global peers.
Adani Ports and Shanghai International Port—both larger operators—show no equivalent price behavior. The parabola is local. (Figure 5, lowest images)
That divergence makes ICTSI’s acceleration even more
striking.
VII. The Intraday Pattern
Figure 6
Four of the five trading sessions this week followed a recognizable structure: early pumps, momentum that faded or peaked into the close, and pre-close dumps in three of those four sessions. (Figure 6)
The sequence is not random. Concentrated positions—anchored around largest cap names with broker coordination—set up a strong open. When momentum peaks or the desired level is reached, supply materializes into the closing dump, leaving retail and non-cartel institutional participants on the wrong side of the book. And insiders rearm for the next day’s trade.
The redistribution dynamic here is straightforward:
those who set the opening tone capture the gains; those who follow the signal
absorb the unwind.
The result is similar: headline index strength masks increasingly fragile breadth underneath.
It is visible in the intraday data with unusual clarity.
VIII. Participation Collapse and Capital Consumption
Despite repeated modernization initiatives—including
digital onboarding, reduced board lots, REIT expansion, market-structure
reforms, and other capital-market development programs—active participation in
the Philippine equity market has continued to deteriorate.
Figure 7
Active investor participation fell to a
record low of 11.8% in 2025. More strikingly, institutional participation
did not merely decline in activity; the absolute number of enrolled
institutions contracted from 32,284 in 2024 to 29,910 in 2025. (Figure 7, upper
pane)
The participation collapse is not a failure of access. It is a rational response to a market that has repeatedly demonstrated that insiders capture the gains while latecomers absorb the distribution.
This has broader political-economy implications.
Sustaining
elevated asset prices is not solely about investor confidence or market optics.
Equities also function as collateral. Rising share prices support credit
expansion directly through pledged securities and indirectly through valuation
effects on parallel assets, balance sheets, and spending behavior.
The reflexive relationship between asset prices and credit expansion is not a side effect of the system. It is one of its central operating mechanisms of fiat systems.
In this sense, supporting financial asset prices becomes intertwined with a broader economic model dependent on liquidity, leverage, and wealth effects. Policies such as CMEPA, PERA, and related capital-market initiatives reflect this orientation by theoretically channeling savings toward financial assets and expanding the investor base upon which asset-price support depends.
Instead, what this produces over time is capital consumption disguised as capital formation. Savings intermediated through a distorted pricing mechanism do not necessarily accumulate into productive capital; increasingly, they facilitate redistribution and economic maladjustments.
The weekly headline performance of the PSEi may communicate one story. Market breadth, volume concentration, and participation trends suggest another.
Concentration, however, carries its own tradeoffs.
The more a benchmark depends on a single company, a dominant narrative, or a narrow liquidity channel, the less representative—and potentially more fragile—it becomes.
When one stock increasingly becomes the market, the benchmark may no longer be signaling broad economic strength. Instead, it may be signaling the progressive narrowing of the channels through which liquidity continues to flow.
IX. Conclusion: A Late-Cycle Signal
The PSEi's recent outperformance may say less about broad Philippine corporate strength, the economy and more about the extraordinary influence of a single firm.
ICTSI's dominance increasingly resembles concentration dynamics observed in other late-cycle markets: narrow leadership, selective liquidity, weakening breadth, and a widening divergence between financial performance and underlying participation.
The key question is not whether ICTSI can continue to rise indefinitely or even whether its advance can catalyze a broader re-rating across PSEi constituents. Rather, it is whether a benchmark increasingly dependent on a single stock reflects the progressive narrowing of liquidity channels, exposing deeper market, financial, and economic fragilities characteristic of a late-cycle environment.
A market sustained by increasingly narrow leadership may prove particularly vulnerable to external shocks, especially when global liquidity conditions tighten. The recent crash of Indonesia's JKSE amid mounting currency pressures illustrates how quickly seemingly stable market narratives can unravel once economically sensitive conditions turn less favorable. (Figure 7 lowest diagram)
