Look to global equities in 2010: AXA

Investors looking to take advantage of the global economic recovery should look to global equities, according to AXA’s chief investment officer Mark Dutton.

Following the pattern of previous bear markets over the past 40 years, the current level of recovery in the global index — nearly 50 per cent since the lows of March 2009 — may climb as high as 150 per cent over the next two to three years, Dutton said.

Because the Australian market is so concentrated in sectors such as materials and financials, investors looking to take advantage of sectors such as utilities or information technology — where there is relatively little choice in Australia — will have a vastly greater choice if they look at the global market.

Due to the wide spread of valuations created in the wake of the global financial crisis, some stocks have remained dramatically undervalued — creating significant opportunities for Australian investors in the global market. In order to take advantage of these undervaluations, investors should research individual stocks rather than invest in the MSCI World Index, Dutton said.

He added that the MSCI only provides a snapshot of the investments available, with the 1578 stocks included representing a total closer to 10,000. In particular, many emerging market equities are absent from the MSCI, which means investors who do their research into global equities will have a significant advantage, Dutton said.