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- The Luminary
- Sep 6, 2021
- 3 min read
The month of August may be a scary thing for many investors because of the bad luck it brings to the stock market. But nobody can predict the market's movement with 100 percent certainty.
The month of August is widely known as "Ghost month" for traders and investors. Due to a reduction in buying activity, stock prices are believed to be weak during this period, which typically falls between the final week of July and the middle of September according to the Chinese lunar calendar. This year, the investors are facing not only the bad luck brought by the month of August but also the challenges given by the existing pandemic. According to Philippine Stock Exchange (PSE), the market is expected to remain volatile this week as the country continues to log more Coronavirus Disease 2019 (COVID-19) infections. The Philippine Stock Exchange index (PSEi) went down by 33.91 points or 0.49% to close at 6,786.62 last Friday, while the broader all shares index lost 0.89 points or 0.02% to 4,204.11. Week on week, however, the benchmark index increased by 153.40 points from its 6,633.22 close on August 20.
Particularly, when there's COVID-19 resurgence and strict reimposition of lockdown, the jittery reaction in the market takes place.
With all the unexpected negative changes happening, riprap in equity markets is still visible while being hopeful of smooth appreciation in growth and stability in relation to the state of market players. ATRAM Equity Portfolio Manager, Mr. Nicanor Yumul summarized what's persisting in the Philippine stock market. Volatility is obvious and in a broader perspective, prices in the market are moving back and forth between a higher price and a lower price. Particularly, when there's COVID-19 resurgence and strict reimposition of lockdown, the jittery reaction in the market takes place. As of July 28, 2021, the stock market closed at 6 473.03, a 9.3% down from the close of December 2020. Due to the Delta variant, the market has slowly gone down. Despite the volatility, the 2021 mid-year stock market briefing by the President and CEO of PSEi, Ramon S. Monzon presented that market liquidity remains robust. Even though institutional trading is decreasing, retail trading increased from 26.9% in 2020 to 37.3%. Moreover, foreign investors leaving the ASEAN market paved a way for local investors to sustain market activity significantly from 54.6% to 67.4% along with the strong formation of capital raising activities and listing pipeline.
The telecommunication industry also became ghostbusters as they showed a breakout after consolidation. According to Summit Securities, Inc. President Harry G. Liu, βTechnically speaking, the market has been going up the last few days basically carried by telco companies.β The appreciated market price was up and mainly obvious to Globe Telecom and PLDT. Meanwhile, DITO Telecommunication broke its resistance, and Converge has been trending upwards since the start of August. However, Absolute Traders Senior Technical Analyst Bonner Dytoc still sees a generally bearish pattern in local stock market charts. For the short term, it looks bullish, but for the overall view, it is quite bearish.
The month of August may be a scary thing for many investors because of the bad luck it brings to the stock market. But nobody can predict the market's movement with 100 percent certainty. However, historical evidence shows that the stock market moves in three directions: upwards, downwards, and sideways. What goes up must eventually come down, and vice versa. When the market is down, buy stocks and sell when the market is up. With this, a very well-known personal financial consultant and investor named Marvin Germo shared a piece of advice from an investing standpoint on what to do with what's happening on the stock market today. "Even when the price goes down or when the price would go up is for you to follow your plan and not to be emotional."
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