(By Roger Tan, SIAS Research)
The fearful month of May is finally coming to an end. The Greek debt crisis, China’s cooling off measures and now the North and South Korean tension all seem to have coinciden- tally happened in this fearful month. The month till date saw the STI fall by about 6.9 per cent, while the S&P 500 fell by 9.4 per cent. Are we going to see a brighter June 2010?
The STI was marginally higher last week as more positive economic data came into the market. STI was up 0.2 per cent for the week, while the S&P 500 was up 1.4 per cent. Fear over the Greek debt crisis seems to have subsided a little, but the new fear in the market now is the North and South Korean tension. The age old child‐like tension between the North and the South should not significantly affect the global economy – even if a real war breaks out – but investors are now ready to leave the market with almost any excuse. We cannot blame investors; they cannot afford having any open position when watching the World Cup.
But the market seems to be suffering from exhaustion now after so much has happened in just a month. While we may see some positive movement in early and end June, we believe that June will mainly be directionless. It is a good idea to collect some ETFs, such as the STI, HSI, and the H‐shares, this month for the long term.
For individual stocks, we urge investors to take a closer look at the companies that we have been analysing as prices now are even more attractive than before. Marco Polo Marine and Cheung Woh continue to be our top picks for the month and with prices now lower, the price‐value differential is now higher.
