For once it may not be wise to sell in May
Normally shares underperform during the summer, but this year could be different
"Sell in May and go away." Will this be the year that the old investment adage, arising from a long-run statistical underperformance of stocks from May to October versus the period from November to April, proves wrong?
Well, perhaps, say a number of fund managers who spoke to the South China Morning Post on their immediate outlook for equity markets.
Derek Kwong, the chief investment officer at Basic Asset Management, said: "I am a bit positive on the outlook after two to three months of correction. It seems the index will have some support at a level of 22,000."
That assessment comes after a sell-off that took the Hang Seng Index to a five-month low last month.
The index began the year with a gain of 4.7 per cent in January, with most fund managers then expecting a total gain for the year of between 10 and 15 per cent, which would take the index to 24,000 points by December.
But sentiment turned bearish in February as disappointing economic data from the mainland and concerns over a slew of risks such as shadow banking dried up foreign capital flows into the market and took the index from a high of 23,822.06 on January 30 to a trough of 21,512.52 on April 18.
William Fong, a fund manager with Barings, who remains bullish on mainland property developers and carmakers because of strong sales growth prospects, said: "I am against the 'sell in May' advice. The Hong Kong market can't be much cheaper, due to the valuation gap with the United States and Asean markets at present."