MANILA – The Chinese believe spirits of the dead roam the Earth on the seventh month of the lunar calendar, but is this enough to spook investors from the stock market?
An analysis by the ABS-CBN Investigative and Research Group of Philippine Stock Exchange data compiled by Bloomberg from 2000 showed that trading is not necessarily lethargic during “ghost month.”
This year, superstition takes hold on the financial markets from Aug. 22 to Sept. 19.
In 11 of the 17 ghost months since 2000, the main index closed higher on the last day of the month, compared to the start of the month (Figure 1).
The usual hypothesis is that the PSEi goes down during ghost month and then rebounds right after. From Figure 2, it was shown that this only happened during 2005, 2013 and 2015.
Closing levels of the PSEi are also likely higher on average during ghost month compared to regular months. (Figure 3).
Data shows there is no consistent drop in the value (volume multiplied by price) during ghost month. Values are usually higher compared to regular months (Figure 4).
Graphs and tables derived by ABS-CBN Investigative and Research Group showed no consistent pattern to establish a relationship between ghost month and the PSEi.
The spikes in the graphs were too random and might not reflect the daily drivers of market swings such as domestic and global politics and economic news.
Still, RS Lim and Co president Ali Yu sees no harm in observing ghost month.
“In deference to our deceased relatives and loved ones… It is really to clean up the place and offer incense. There is a long list of other superstitions. Major decisions should be postponed,” Yu told ANC.
China Bank head of trading and sales Benny Chan said possible weakness in the market would be an opportunity to buy on the cheap.
“I tend to trade on the contrary so when people say it’s a ghost month and you should hold off, I actually try to pick up some stocks there because these are usually some of the best times you can pick bargains,” Chan told ANC.
AB Capital analyst Lexter Azurin offers an alternative explanation, August is summer in the West and for businessmen, this means going on holiday.
“Ghost month is basically a calendar event and most of the fund managers are on vacation,” he said.–With report from Warren de Guzman
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