Hang Seng: +1.50%
Straits Times Index: -1.70%
China is the best performing market globally with the SSE up 4.9% in May. It is the best performing month for the year so far as well.
NASDAQ clocked the first negative month for 2021 with the index registering a loss of 1.5%. This is due to the inflation worries and investors are concerned about the valuation of the technology sector.
Market has continued to see rotation into value play with DOW outperforming both the S&P500 and NASDAQ. Will this trend continues?
The STI registered its first negative month of 2021 as well with the index falling 1.7% in May. The country experienced a spike in local infection which forced the government to go back into phase 2 (heightened alert) again. This measure restricted the movement of Singaporeans and working-from-home becomes mandatory. However, with the latest announcement by the Singapore government on the 31st of May, they have said that there should be no extension to to the Phase 2 (Heightened Alert) that began on May 16. If the number of community cases falls further, the country “should be” able to relax existing restrictions after the 13th of June. This is good news for the market, especially for the travel and hospitality sector.
With the resurgence of the coronavirus infections in Asia, the asian markets have underperformed relative to the other global markets like US and Europe. As we head into the second half of the year, the recovery in the global economy is expected to be bumpy. Occasionally, countries may face a spike in coronavirus infection with the new strains said to be more infectious. However, with vaccinations happening all over the world, we should be expecting the number of infections to go down.
Central banks have been accommodative with their policies stance even with the recent fear of inflation. The Federal Reserve will continue its ultra-low interest rate policies and bond-buying program, a sign that it wants to see more evidence of a strengthening economic recovery before it considers easing its support. They call the current inflation “transitory”, which is expected to taper off in the future once the economy slowly opens up.
Click here to read about an analysis of the current inflation situation which i have written earlier.
So what now?
My personal target for the S&P500 for the end of 2021 remains at 4600. I have worked out that target sometime in March 2021 and was documented down on my linkedin post attached below.
Yes, it is not going to be a straight and easy road. I am expecting volatility to sets in from July to September but ultimately, back to recovery in the 4Q of 2021 to hit 4,600 point on the S&P (fingers crossed).
With that in mind, knowing roughly what to expect in the coming months, i would buy on dips rather than selling into strength.
Again, the above is strictly my views and may not be right. Please do not take the above as financial advice. It’s strictly for informational purposes only.
Wishing all readers a profitable 2nd half.