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Super drives Aust equity values
Superannuation is one the key elements maintaining the value of Australian equities, according to Fidelity portfolio manager, global equities.
Asked his view on the manner in which domestic equities had continued to drive superannuation returns in Australia, Korhonen said the compulsory superannuation guarantee system was one of the key factors.
“Australia has a well-developed and sophisticated market, but another factor is the government-regulated savings scheme and the impact this has on supply and demand,” he said.
Korhonen said that as the flow of savings continued, it had to go somewhere, and this was reflected in the value of Australian equities.
He said that, from his perspective, Australian equities were relatively expensive and he saw better value elsewhere in the world, including the US and Japan.
“The US is viewed as having under-performed in recent years and therefore can be viewed as attractive, while in Japan, for the first time in 15 to 20 years, valuations were closer to global valuations,” Korhonen said.
Looking at emerging markets, he said he was concerned that many investors did not seem to believe that emerging market risk existed any more.
AUTHOR
Mike Taylor
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