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Sell In May And Go Away – No Way!
By: Jade Lee
Articles (97) Profile

The adage “sell in May and go away” may not come true this year. Momentum in the stock market remained strong with the Dow Jones Industrial Average and Standard and Poor’s 500 closing at new highs on 16 May. As the market now seems to be on the right track of recovery, this has also prompted the debate within FOMC whether to slow down or expand the pace of its monthly bond purchases later this year.

In Europe, a disappointedly 0.1% growth in Germany’s 1Q13 GDP did little to stop the overall Eurozone economy from contracting for a sixth straight quarter at an annualised rate of 0.9%. ECB President Mario Draghi stressed that they may cut rate further if European economy weakens.

Back in Asia, Japan’s upbeat 1Q annualised gross domestic product growth of 3.5% has brought cheer for investors. Meanwhile, China’s economy continues to grow but at its slowest pace since emerging from the 2008 global financial crisis. Notably, retail sales accelerated to 12.8% in April, but were still below the government’s full year target of 14.5%.

Locally, the Straits Times Index hit more than 5-year high on 16 May before closing at 3449.30 on 17 May. On the economic front, the non-oil domestic exports fell 1% in April following a 4.8% drop in March, owing to a continued decline in electronics exports. Elsewhere, domestic new private homes sales plummeted 50% in April, coming off an exceptional high jump in March.

While most investors are busy tracking every jot and tittle of the market to see if we have hit yet another record high, do note that we are still in the midst of first quarter reporting season. At the same time, investors may also take cues from Fed comments on when the Chairman Ben Bernanke will begin to tighten its monetary policy and reduce its massive balance sheet. The committee is scheduled to meet in June.

 

Jade manages and oversees a portfolio of stocks which are mainly focused on the mining and property sectors at Shares Investment.

Please click here for more information about this author.


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