“Sell in May and go away”? Not this time!

Date: June 2, 2025

• The Straits Times Index rose 1.6% in May to 3,894.61
• Wall St indices gained 3.9-9.6% as tariff fears eased
• MSCI Quarterly Index Review lifted volume on 30 May to S$3.32b
• US Courts leave the tariff situation in limbo
• The US Federal Reserve kept interest rates unchanged as expected
• Moody’s downgraded US Government debt
• Singapore Paincare received privatization bid at S$0.16 per share
• Frasers Property announced second attempt to privatise Frasers Hospitality Trust

 

All major indices rose in May

“Sell in May and go away’’ is a well-known market saying which according to online resource Investopedia is based on US stocks’ supposedly underperforming during the six months from May 1 to Oct. 31.

“Since 1990, the S&P 500 has averaged a return of about 3% annually from May to October versus about 6.3% from November to April’’ reports Investopedia.

“Based on historical data, investors could try to capitalize on the pattern by rotating to less economically sensitive stocks from May to October. However, for most investors, the best strategy in general is to buy and hold equities while ignoring the noise’’.

This May however, the adage did not hold true. The main “noise’’ in the month was residual fallout from the sweeping tariffs unveiled by the Trump administration in early April, but were then later paused for most countries except China.

As the saga dragged on, an increasing number of market observers took the view that most of the threatened tariffs would be postponed, reduced or perhaps even cancelled altogether, given the concessions that were granted.

As a result, Wall Street regained almost all of the losses it sustained in April – for May, the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite rose 3.9%, 6.1% and 9.6% respectively.

As for the Straits Times Index, it also performed admirably, rising 62 points or 1.6% over the month to end at 3,894.61.

For the week, the STI recorded a 12-points or 0.3% rise. Over on Wall St, the Dow, S&P 500 and Nasdaq added 1.6, 1.9 and 2% for the week respectively.

MSCI Quarterly Index Review lifted volume on 30 May to S$3.32b

In its 30 May Market Roundup, SGX Research reported that during the month, institutions had marginally net bought S$306,522 ahead of the final May 30 session of the month.

“The May 30 session is expected to see a bout of institutional rebalancing related to the MSCI Quarterly Index Review on the close’’ said SGX Research.

As it turned out, this was the case – Friday’s turnover came to S$3.32b, more than two-and-a-half times the S$1.26b done on Thursday. Of this, trades in DBS alone were valued at S$976.5m or about 30% of the entire day’s business.

SGX Research also reported that for the month of May through to May 29, retail net sold S$280 million in Singapore stocks, followed by as much as S$2.4 billion in net institutional buying for the first four months of 2025.

“Singapore Airlines was the most net sold stock by retail investors in the month-to-date while gaining 7%, which brought its year to date gain to 11%’’ reported SGX Research.

US Courts leave the tariff situation in limbo

Early last week the US Court of International Trade barred most of the tariffs, ruling that Trump had overstepped his authority. The move was welcomed by the markets, led by Wall Street.

However an appeals court for the federal circuit on Thursday ordered a temporary stay that would allow tariffs to remain in effect while the court hears arguments.

US newspaper Barron’s quoted Adam Turnquist, chief technical strategist at LPL Financial:

“The added wrinkle to trade policy introduces more uncertainty about where the effective U.S. tariff rate will ultimately land and likely delays the timeline for clarity — given the legal loopholes the administration is expected to utilize in response to the Court’s ruling to continue to use tariffs for leverage in trade negotiations’’.

“And while trade policy uncertainty has dropped significantly since the reciprocal tariffs were announced on April 2, it still remains relatively high.”

The US Federal Reserve kept interest rates unchanged as expected

At its May Federal Open Markets Committee (FOMC) meeting, the US Federal Reserve lived up to market expectations and kept interest rates unchanged.

Risks to growth “haven’t materialized yet,” Fed chair Jerome Powell said. “We can afford to be patient, while knocking down any notion of taking pre-emptive rate cuts as inflation is still running above target.

“It’s not a situation where we can be pre-emptive, because we actually don’t know what the right responses to the data will be until we see more data,” Powell said, referring to the tariff situation.

As of Friday, the futures market was pricing in a 4% chance of an interest rate cut at the June FOMC, which means a 96% chance of there being no change.

Moody’s downgraded US Government debt

Credit ratings agency in May cut the United States’ sovereign credit rating by one notch to AA1 from AAA, the highest possible.

The debt downgrade put immediate pressure on bond prices, sending yields higher. The 30-year U.S. bond yield traded above 5% and the 10-year yield topped 4.5%, hitting key levels at a time when the economy is already showing signs of strain from tariff uncertainty.

Singapore Paincare received privatization bid at S$0.16 per share

Medical-services company Singapore Paincare last week announced it has received an acquisition bid for S$0.16 a share from Advance Bridge Healthcare, a management consultancy for healthcare services.

This values the company at US$25.7 million, comprising 171 million shares, and represents a premium of 27% over Singapore Paincare’s last traded price of S$0.126 on Monday.

If the transaction goes through after the necessary regulatory approvals are obtained, Singapore Paincare will be delisted from Catalist, said the company.

Under the terms of the agreement, Advance Bridge Healthcare has the right to switch its offer to a voluntary conditional cash offer or a pre-conditional voluntary cash offer.

Frasers Property announced second attempt to privatise Frasers Hospitality Trust

Frasers Property proposed to privatise Frasers Hospitality Trust (FHT) via a scheme of arrangement at S$0.71 per stapled security, citing an inability to improve the distribution and growth of FHT in the face of macroeconomic headwinds.

This is the second time in three years that Frasers Property has attempted to privatise the stapled group. It tried to do so in September 2022 for S$0.70 per stapled security, though the privatisation attempt failed then after being voted down by shareholders.

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