This edition of Oliver’s Insights note looks at the latest rough patch in global share markets. The key points are as follows:
- Global shares entered a rough patch in mid-September on profit taking and worries about earnings, Europe and the US fiscal cliff more recently. This has affected most listed growth oriented assets.
- As a return to global recession or severe slowdown is unlikely in 2013, we view this as just a correction with the broad rising trend in shares likely to remain intact helped by attractive valuations and easy monetary conditions.
- Australian shares will also likely benefit from a rebound in global shares. They are cheap relative to bonds, will benefit from a likely further decline in official interest rates by the Reserve Bank and will gain from improved sentiment regarding China. One dampener though remains the strong Australian dollar which continues to make life tough for Australia companies and which makes it hard to be confident that Australian shares will outperform global shares.
To read the full report, please click here.