Global investment manager, Threadneedle Investments (Threadneedle), says Australian investors should be encouraged to reassess their exposure to growth assets as new opportunities emerge in global equity markets.
Neil Robson, Threadneedle Global Equity Fund Manager said:
“Trends show that the Australian investor is currently sticking with investments onshore, and predominantly in cash. Threadneedle is of the view that investors re-balancing portfolios must take a considered look at the risk of ignoring offshore investment opportunity. We certainly believe Australians should be looking at global investment opportunities in this light.”
Threadneedle’s Robson remains positive for the outlook on global equity markets.
- Firstly, from a technical perspective markets appear to be oversold. Various signals from AAII bull bear investor sentiment readings to surveys of institutional cash levels suggest that we are nearing the end of this sell off.
- Secondly, the relative value of equities to bonds is extreme – witness the growing popularity of income funds.
- Thirdly, on the macro front while US economic data is no longer surprising positively we have a steady economic recovery in place with the need to tighten fiscally delayed till post-election.
“In China 8.1% may be slower but policy is being eased and we believe that the authorities remain in control of the situation. It is also worth noting that companies continue to thrive in this environment. Early indications of the Q1 reporting season suggest that all is well in the corporate world and we can see more cashflows being returned to shareholders in the form of increased dividends and share buy backs.
And in Europe?
“New capital will need to be raised in Spain, but the Long Term Refinancing Operation (LTRO) has reduced the funding risk and the threat of systemic issues. We have moved on from last autumn – the world is far from perfect, but the infections are being isolated. Look at the year to date returns in European markets, Spain is down -16% but Germany is up 15% and Italy is the only other market except for Spain which is in negative territory.”
