Historically, September and October are not typically high-performing months for the stock market. Many experts recommend waiting and being cautious, but there are many stories to watch during this time.
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| VN-Index often decreases in September in recent years. Photo: Duc Thanh |
Late Autumn Haunting
“Sell in May and go away” - a popular saying in the stock market expressing advice and strategy to withdraw from the stock market in May - is no longer strange to investors. However, looking back at the performance of the US and Vietnamese stock markets in the past decade, Mr. Tran Hoang Son, Director of Market Strategy at VPBank Securities Company, said that September and October are the “nightmare” for investors.
According to this expert's statistics, over the past 4 years, September has recorded very low performance for the S&P 500 Index. If we calculate the long cycle of the past 10 years, on average, September has the lowest performance of the year for the S&P 500. Similarly, the VN-Index has decreased in September in recent years. "I think this is also a seasonal factor. In Vietnam, March, April, September and October often have low performance," said Mr. Son.
The "curse" of September - October is also emphasized by Mr. Nguyen Trung Du, Director of Brokerage Division of JBSV Securities Company. Sharing at the WeTalk program "What to invest in at the end of 2024?", statistics of the Vietnamese market in the past 24 years, Mr. Du said that if the VN-Index goes down in October, it will usually be the month with the sharpest decline in the year.
In the current context, the VN-Index has not yet surpassed the resistance zone around 1,285 - 1,300 points. The average liquidity in September is still at the lowest level of the year, although it has inched back, exceeding VND20,000 billion in transaction value on September 20, partly thanks to two foreign ETF funds completing their portfolio restructuring in the third quarter of 2024. According to Mr. Son, September this year is likely to be a month with low efficiency.
In the second week of September 2024, the US Federal Reserve (Fed) made an important decision when it cut interest rates for the first time in the past 4 years, ending the cycle of raising interest rates to the highest level in 22 years to deal with inflation. Some people think that the Fed's drastic interest rate cut is due to concerns about the risk of recession in the US economy, but many experts believe that cutting up to 50 basis points of the operating interest rate is more like "a preemptive intervention" to avoid the delayed impact of monetary policy, rather than "a fire-fighting action" by the Fed when everything is too late.
However, looking back at history, the stock market at the time the Fed lowers interest rates often has unpredictable fluctuations. Statistics from experts from VPBankS show that in the 3 to 6 months after the Fed lowers interest rates, regardless of whether there is a recession or not, the market often has a downward adjustment period before going up. With the impact of the Fed's move in mind, Mr. Son said that investors should wait and be cautious in September and October.
Is there a harvest season?
However, according to Mr. Son, the rotation of capital flows can make a difference. In fact, statistics in the first week after the Fed decided to lower interest rates, the top 10 stock markets with the strongest growth in the world all recorded a rebound of over 2%, led by the Hong Kong stock exchange index with an increase of over 5%, the Philippines (+3.27%), Nikkei 225 (3.2%), or the Shanghai stock exchange (+2.2%)...
Vietnam’s stock market did not rise in the leading group last week, but the bright spot was the return of foreign capital. Foreign investors had 4/5 net buying sessions, and only net selling on September 20, which was also the session when two foreign ETFs finished restructuring their portfolios. In total, the net buying value was about VND1,230 billion, ending the continuous net selling streak that had extended into the 4th week.
Sharing with Dau Tu Newspaper reporters, Mr. Nguyen Duc Khang, Head of Analysis Department of Pinetree Securities Company, said that in case the US is in recession, it will have an adverse impact on Vietnam, especially export enterprises. On the other hand, the Fed's interest rate cut will reduce pressure on the exchange rate, thereby increasing the State Bank's ability to maintain a loose monetary policy with low interest rates as at present. Assessing the overall impact, Mr. Khang said that the Fed's decision has a more positive impact on the Vietnamese economy.
Besides the general impacts of the monetary policy shift of the world's number one economy on the economy and stock market, the Vietnamese market itself also has its own stories. This October, investors are waiting for the announcement of FTSE Russell's market classification. This rating organization has put Vietnam on the stock market upgrade watch list for the past 6 years. There is certainly no change in the ranking this time.
However, the issuance of Circular 68/2024/TT-BTC amending and supplementing a number of provisions "removing" bottlenecks by allowing foreign institutional investors to trade and buy shares without requiring sufficient funds and taking effect from November 2, 2024. This will be the basis for FTSE Russell to give a positive assessment of the Vietnamese stock market.
Along with that, Yagi - the strongest storm in 30 years in the East Sea region causing serious damage is also a "black swan" that appears unexpectedly and can cause unpredictable impacts. However, according to Mr. Dinh Quang Hinh, Head of Macroeconomics and Market Strategy, Analysis Division of VNDirect Securities Company, growth supporting factors will offset the damage from the storm and support GDP growth in the third quarter of 2024, including the Government's expected support programs for people and businesses affected by the storm and economic recovery after the storm; import and export activities are more positive than initially forecast; and the global credit environment is gradually loosening.
Source: https://baodautu.vn/chung-khoan-va-noi-am-anh-cuoi-thu-d225723.html
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