May 2010 took a hit

Last month was a month of negatives.


The Eurozone sovereign debt crisis received almost daily news updates in May. Fear of global banking system seizing up again, much like the financial crisis that erupted with the collapse of Lehman Brothers in September 2008, began to circulate in the investing community.


Within the month, the Straits Times Index (STI) declined 7.5 per cent to 2,752 points. The Dow Jones Industrial Average (Dow) dropped 7.9 per cent. The major European stock indices were not spared, since they are at the epicentre of this recent crisis. The Euro currency dropped to the lowest point in four years against the US dollars sinking to 1.19 € to 1 US$ last week.


As a consequence, new private home sales in May (1,078 units) was less than half that of April (2,208 units) sales data. Home buyers in Singapore became cautious because there were fears.


Commodities, currencies, and country specific funds too took a hit. However, the bad news lifted slightly at the start of this week. Dow rose 2.1 per cent to 10,404 points yesterday and STI rose 1.02 per cent to 2,846 points today.


My diversified portfolio declined 2.1 percentage points on costs but this is just on paper and not realised loss. I sat out in May and did not liquidate or sell out any investments and was glad that the economic fundamentals were not worse than 2008/09 global recession.


Copyright © 2010, the author known as LKT in Singapore.


The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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