Philippine Stock Market Research

Does the Ghost Month Really Matter for the PSEi?

July 23, 2015

It has nothing to do with fundamentals but we are curious how the PSEi fared in the ghost month in the last decade. This is perceived as a “bearish” period in the Chinese calendar. In Chinese culture, this is when spirits come out from the lower realm to our world causing mischief and other unfavorable things. August is tagged as the ghost month. In the last decade, the PSEi generally did not fare well in August.

Ghost Month

However, the ghost month differs every year in the Chinese calendar. It spills over to September a lot of times. This year’s ghost month is August 14 to September 12. In the last decade, the PSEi did well in the ghost month.

Ghost Month 2

Putting a dash of fundamentals into this, August is first half or second quarter earnings season. This pretty much fine-tunes all the analysts’ company forecasts for the year. It is also when second quarter GDP growth is announced. August to September is also typhoon season. PX’s tailings dam accident was in August. Heavy rains caused its tailings dam to overflow suspending operations for some time.

What is remarkable in the two tables is not the start of month and end of month comparison. It is the rise of the PSEi every year with just one speed bump in 2008 when the global financial crisis came about. Look at the tables. The PSEi rose from 1,954 in July 2005 to 7,616 at this point in time. This is our index. This is amazing. It shows how superior stock investments are in the long term.

Instead of superstitions, it is essential to track these speed bumps or extraordinary circumstances that results to market corrections or consolidations. In 2008, it was too much leverage. In 2015, we see overheating valuations as a major concern for a speed bump. These speed bumps, by the way, to us are golden opportunities and temporary periods to position in stocks at lower prices. It is a period when the PSEi takes a breather before it resumes its upward trend.

Disclaimer

The Philippine Stock Market Research report is solely for information. It should not be constituted as an offer for solicitation for the purchase or sale of securities mentioned. The information herein has been obtained from sources believed to be reliable. Whilst every effort has been made to ensure accuracy, we do not guarantee the accuracy or completeness of the report. All opinions and estimates expressed herein constitute our judgment as of this date made on a reasonable basis and are subject to change without notice. No liability can be expected for any loss arising from the use of this report or its contents. As this is general information, it does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may obtain this report.