Russell ‘positive’ on equities markets’ outlook

Equity markets currently offer investors the opportunity to “buy future global growth and profits at a significantly discounted price”, according to Russell Investment Group investment strategist Andrew Pease.

“The fundamental questions for any investor are ‘what is the long-term outlook for profits?’ and ‘what price am I paying for these profits?’,’’ he said in the Russell quarterly ‘Market Barometer’ for April 2008.

He said the outlook is “more positive for the local and global equity markets for the second half of 2008 and into 2009 after a brutal start to the year”.

“This is because the US economy should gain support from an enormous amount of fiscal and monetary policy stimulus and because equity market valuations were never stretched before the correction,” he said.

On specific sectors, Pease said that global equity markets now offer significant longer-term value despite short-tem uncertainty, and Australia should participate in a global equity market upswing.

“However, additional headwinds mean local market returns could disappoint relative to global peers during the next market upswing after having been one of the best performing markets during the last phase.”

The listed property trust (LPT) sector may see more volatility in the short term, but longer-term investors are now beginning to see value in diversified LPT exposure, he said.