The economic and financial environment still favours equities, according to Russell’s July Market Barometer report which also found that the US housing downturn is not over yet, and the bond sell-off is unlikely to be sustained in the wake of the US sub-prime mortgage upheaval.
Losses suffered by several large hedge funds have added to worries that the good times for investors are close to an end. With this considered, market valuations remain reasonable and the global profit expansion shows no sign of ending, the report authored by Russell investment strategist, Andrew Pease, said. The local share index has risen 110 per cent since the beginning of 2003, a doubling of the share market over the past four years. However, the report suggested this market boom had gone largely unnoticed by the general public. Investors seemed to prefer property, even though house prices had lifted just 13 per cent over the past three years. The report said global equity markets were showing real value and were expected to remain the best performing asset class, at least for the next quarter. This was underpinned by one of the largest global profit expansions ever seen with corporate profits growing at a double digit pace for the past four years. This is keeping interest rates at historically low levels and generating a remarkably strong profits cycle.
As super fund CIOs return to work for 2025, all eyes are on two things: Donald Trump’s presidency, and inflation. But they’re not the only issues that will drive investment decisions and returns, and some of them may present an unfamiliar set of challenges for a cohort of investment professionals that has grown up experiencing a particular set of market and economic conditions.
Simon HoyleJanuary 7, 2025
