"Buy Stocks in January and Sell in April"

Samsung Securities 2016-2022 Monthly Average Stock Market Returns Analysis
Energy, Materials, IT Strong... Healthcare, Utilities, Consumer Goods Weak

[Asia Economy Reporter Lee Seon-ae] "Buy in January, sell in April." According to Samsung Securities' analysis of the average monthly returns of domestic listed stocks over seven years from 2016 to 2022 (as of December 16), this is the optimal timing for buying and selling.

Samsung Securities analyzed whether stock market adages such as the "January effect," where stock prices tend to rise higher in January compared to other months, and "buy in November, sell in May," which suggests strong stock performance from November to May and relative weakness from June to October, actually hold true in the market.

On the 27th, Samsung Securities' Data Analytics Team, responsible for market and customer data analysis, reported that the monthly net purchase amount of individual investors in the KOSPI from 2016 to 2022 was 6 trillion KRW in January. This was significantly higher than the average monthly net purchase amount of 2 trillion KRW, indicating that buying pressure was strongest in January among all months from January to December.

Returns, however, differed. The month with the highest annual return was April (3.3%), followed by November (1.8%), and then July and December (1.2%). Notably, April recorded positive returns in six out of the past seven years, excluding 2022. During the same period, January's return was 0.4%, slightly above the average monthly return of 0.24%.

A Samsung Securities official stated, "January sees a surge in buying as investors start the year with optimism and reflect changes in the macroeconomy and investment environment. However, actual returns require time to reflect corporate performance and other results."

Over the past seven years, the sectors with the highest average returns from January to April in MSCI KOREA were Energy (4.4%), Materials (3.2%), and IT (2.4%). The sectors with poor returns were Healthcare (-1.7%), Utilities (-1.3%), and Consumer Discretionary (-0.9%).

Typically, at the beginning of the year when optimism about the economy grows, economically sensitive sectors such as Energy and Materials tend to perform strongly. The relatively good performance of the IT sector can be attributed to seasonal stock price increases in the first quarter, coinciding with the world's largest consumer electronics and information technology exhibition, CES, where new technologies and standards emerge across the tech industry.

Samsung Securities also examined the monthly investment patterns of individual investors by stock size. Analysis of monthly net purchases of large-cap, mid-cap, and small-cap stocks showed that in the first quarter (January to March), the proportion of large-cap stock purchases exceeded half. From July, the second half of the year, small-cap stocks accounted for an average of 70%.

Jung Myung-ji, head of Samsung Securities' Investment Information Team, commented, "At the beginning of the year, before the market establishes direction, buying pressure concentrates on large-cap stocks linked to market movements from a preemptive buying perspective. As leading sectors emerge, investors appear to shift toward stock selection. In 2023, rather than a broad index rise, stock price differentiation by individual stocks is expected to progress, making it a year where investors' skills will be revealed."

This content was produced with the assistance of AI translation services.