When it's summer, ghosts and markets blend

In Chinese culture, the 15th day of the seventh month of the lunar calendar is the Ghost Day and the seventh month in general is regarded as the "Ghost Month," in which ghosts and spirits that include those of deceased ancestors slip out of the netherworld.

 

The period is supposedly a dangerous time to make important decisions, especially when money is involved, as the gates of hell are open and the spirits of the underworld are free to roam the face of the earth.

 

Along with the start of the Chinese ghost month, economists say the peak of summer in the northern hemisphere is also eliciting a downtrend from the financial markets.

 

Also called the Hungry Ghost Festival, the ghost month falls on the seventh month of the Chinese lunar year and begins on Friday, August 14, and lasts until September 12.

 

It's that time of year – the peak of summer in the western hemisphere – when families go on a summer holiday.

 

 

Coincides with summer

“The Chinese ghost month also coincides with the period when financial managers in major financial markets, like the US and EU, are on break," John Paolo R. Rivera, program manager at the Asian Institute of Management (AIM) Center for Tourism, said in an interview by email.

 

"Simultaneously, the financial managers in Asia are also in passive mode and contributing to the market slow down due to inadequate buying activities,” Rivera noted.

 

Rivera cited a significant offshoot of the ghost month: reduced purchasing power and consumer spending as household expenditures were done in the previous quarter

 

“I could characterize the Chinese ghost month as a weak period for markets, specifically the stock market. I see this as an opportunity to go long in the stock market,” he said, noting that “... the Chinese ghost month should be seen as an opportunity to make money.”

 

For Alvin P. Ang, Economics professor at the Ateneo de Manila University, markets usually thrive based on the underlying fundamentals of companies and the economy – and not on superstition.

All about fundamentals

 

"I don't subscribe to superstitious beliefs when it comes to the market. It's always about fundamental values," Ang noted. “It’s always about the fundamental values of the stocks. 

 

"It's summer in the west and most people, including traders, are taking their vacation,” Ang said in a separate text message. 

 

“Anything [else] happening is coincidental,” he added.

 

At the close of trading Friday, the benchmark PSEi settled at 7,408.44 – down 164.82 points or 2.18 percent from 7,573.26 on August 3, the first trading day of the month.

 

Nonetheless, AIM’s Rivera said: “The market will eventually correct its pattern and roll with the business cycle that it follows.” – VS, GMA News