Oliver's Insights - Where are we in the investment cycle for shares?
17 February 2011 - This note looks at the outlook for share markets.
The key points are as follows:
- While mainstream global shares may be due for a short-term correction, any pullback should be seen as a buying opportunity as the cyclical recovery in shares still has further to go. Shares are still cheap, confidence in the sustainability of the cyclical global economic recovery is continuing to build and share market liquidity remains favourable.
- US shares are in the 'sweet spot' of the investment cycle and for a short while are likely to further outperform Asian and emerging markets, which are having to tighten monetary conditions in order to head off an inflation threat.
- Australian shares are likely to be in between: monetary tightening in Asia may act as a short-term constraint on Australian shares but with monetary conditions already normalised in Australia and the Reserve Bank of Australia ahead of the curve, Australian shares are likely to continue to benefit from the positive lead flowing from US shares.
