Europe Economy

Why September May Not Be that Scary

September has historically been a month when stocks rose only if they had fallen in the preceding months, but this does not mean this month should be the same, as conditions now are very different, two market analysts told CNBC Tuesday.

"What we think is that most fund managers or at least part of them have missed the rally," Christian Blaabjerg, equity strategist at Saxo Bank, told "Worldwide Exchange".

Combined with the record low interest rates and stimulus money across the world, this can keep the market consolidation going, Blaabjerg added.

The US economy is under the influence of an "enormous monetary and fiscal stimulus," and it is possible that stocks will continue to rise on the back of improved hopes for recovery, Michael Ivanovitch, president at MSI Global, told CNBC.

"I'm glad I am out of New York for this September superstition," Ivanovitch said.

This September Could Be Different: Analysts
This September Could Be Different: Analysts

Apart from the better data, there is also a better mood about the economy that might continue to influence stocks, he said. "Hopefully, some doom and gloom people have been put out of business for a while," he added.

US Recovery Slower than Normal

We are now at the beginning of a world recovery, but it will be slower than normal because of multiple problems still affecting consumers, Richard Hoey, chief economist at Bank of New York Mellon, told "Squawk Box."

"The financial crisis was very dangerous but we got past it because we got such an aggressive response," Hoey said.

But he said problems in the commercial and residential real estate sectors will still hang on growth, which will likely between between 3 percent and 3.5 percent for the next few quarters.

Unemployment is still a serious problem, and will probably get up to 10 percent in the spring before falling down to the current levels later in 2010, he added.

Some economists have said that the US consumer has been hit so hard that the savings rate may go up to 10 percent, even 20 percent.

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"I don't agree with the super-bear argument that we're not going to stop at 5 percent (savings rate)," Hoey said.

For the moment, people's incomes are not rising and this is why they don't spend, but once the number of hours worked in the economy will rise, their income will grow, he added.

Asia the Best Place

Asia is still the place to be to take advantage of the recovery, as China had a "very vigorous" stimulus package, according to Ivanovitch.

"To put it bluntly, Asia is where the action is," he said, adding that even in the case of Japan, where investors have doubts whether the new government will manage to instil life in the economy, there may be pleasant surprises.

The Democratic Party of Japan wants to get away from an export-led growth strategy by stimulating domestic demand, something the previous government had failed to do, Ivanovitch said.

He brushed aside objections that the government will find it hard to amass the cash to stimulate its economy.

"Japan can do it. Japan has the means to do it and I am quite confident that they will do it," Ivanovitch said.

As for the recent volatility seen in the Chinese stock market, it will likely always exist in Shanghai because of the different structure of the market, Blaabjerg said.

"I'm not happy about volatility but I can live with it compared with the sort of investment scenarios in the European region," he added.