Dear all

On 5 Apr, I have posted a write-up (click HERE) on the potential actions that clients can consider to do for their portfolios. Clients and readers who have benefitted by opening margin accounts or used their margin account to add stocks on weakness should be sitting on some good returns.

Based on Table 1 below, Hang Seng, STI and S&P500 have jumped 12.3%; 8.2% and 19.3% respectively from the opening levels on 7 Apr. (I chose 7 Apr opening levels as they are more representative as most only take actions post my write-up.)

If we based on the lows seen on 7 or 9 Apr, the gains would even been more substantial. For example, Hang Seng and STI have rallied  20.9% and 15.5% respectively from their intraday lows on 9 Apr.

Given how much markets have rallied amid the continual uncertainties, is it time to take stock of your portfolio?

Table 1: Indices’ performance since 7 Apr 25 – opening levels

Source: Ernest’s compilations

Why am I cautious on the overall market in the next few months?

Positives

• Significant cash remains on the sidelines (e.g. in money market funds, SSBs, T-bills, and FDs), potentially rotating into equities.
• By 3Q 2025, we should have shortlisted the funds for the MAS S$5B fund. These funds probably can commence deployment in 2026.
• According to Morgan Stanley, a second round of measures is expected later this year. This may include a “Value-Up” initiative—similar to those implemented in Japan and Korea—which could significantly boost investor interest. Readers can refer to this link HERE to know more about initiatives proposed by the Equities Market Review Group.

Risks to Watch

• US$6T of US Treasuries maturing in June may lead to liquidity tightening and soaring bond yields.
• Fiscal uncertainty looms from the Big Beautiful Bill Act. The “One Big Beautiful Bill Act” is being pushed by Republicans for Senate approval by 4 July 2025. Bloomberg (30 May 2025) reports that the bill could add US$2.3 trillion to the U.S. deficit over the next decade — and that’s based on overly optimistic assumptions. The deficit impact could be even larger if a recession occurs, interest rates continue to rise, popular tax cuts are extended beyond 2029, productivity suffers from trade policies, or labour supply declines due to stricter immigration controls.
• A potential flashpoint could emerge if the House and Senate clash over the Trump administration’s spending and tax proposals. Without a deal to raise the federal debt ceiling, the Treasury may run out of funds by August. If the ceiling is raised, the Treasury will likely issue a flood of new debt to cover the deficit and replenish its cash reserves. Either scenario could severely challenge investor confidence in the U.S. fiscal outlook.
• Following Nvidia’s earnings announcement, the market is expected to enter a lull in corporate results until July — this applies to both U.S. and Singapore-listed companies.
• June is traditionally a quieter month for the Singapore market due to school holidays, often leading to lower trading volumes. During this period, companies may also hold off on releasing positive news as investor activity tends to slow.
• Since my 5 April article, the S&P 500, Hang Seng, and STI have seen strong gains. However, without fresh catalysts, it’s uncertain how much further markets can advance.
• The U.S. 90-day pause on individualized reciprocal tariffs — announced on 9 April — is expected to end around 8 July 2025. As this deadline approaches, markets could experience renewed volatility.

Conclusion

My Personal Strategy

💡 I’m taking a selective and disciplined approach:

• Selling into strength, including cutting loss on some stocks and high-beta names with limited catalysts.
• Holding quality stocks unless they appreciate sharply.
• Prioritising cash conservation to position for future dips.
• Rotating selectively—buying fewer names than I sell.

If I had unlimited capital, I’d simply hold and buy more on dips. But managing exposure is key to long-term success.

🔔 Actions for Non-Clients

If you’re not yet a client and would like to receive updates on which stocks I’m monitoring or holding, feel free to reach out. I share notes and 1-on-1 insights based on my company meetings and market tracking.

📩 Email: ernestlim15@gmail.com

🌐 Blog: ernest15percent.com

🔗 LinkedIn: Connect with me

📌 Disclaimer: This post reflects my personal views and does not constitute investment advice. Please consult your adviser before making any financial decisions. Full disclaimer HERE.