Should we leave the equity market for oil?

Ádám Halóka
Investment expert

The European debt crisis affecting the global economy, together with the series of measures recently taken in China aimed at preventing the overheating of its residential property market,may lie behind the unfavourable performance of equity markets in May. It is ironic that the drop in share prices has occurred precisely at a time of improving macroeconomic figures and favourable company reports. The MSCI World index decreased by 9.9% in May in US dollar terms, but scarcely changed in forint terms due to the favourable effects of the weakening forint.

On the first trading day in May, the S&P500 opened at 1189 points, before beginning a sharp correction and closing at 1089 on 28 May, a decline of exactly one hundred points, or 8.41%.

Although it is true that a drop in share prices of this magnitude in a capitalization-weighted index watched by professional investors will in itself not necessarily result in small investors selling their shares en masse, the hesitation of professional investors on the equity markets is nevertheless striking when one takes into account the oft-cited problems of national debt onthe global – and particularly European – level.


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