Share market investors urged to keep faith
Published in thetelegraph.com.au, June 2012
Most are reluctant to call a bottom for Australia's share market whose benchmark S&P/ASX 200 touched a six month low last Monday and closed down 1.09 per cent to 4,063.7 points on Friday.
But Dale Gillham, chief analyst of private investments company Wealth Within, says there are typical signs pointing to a market bottom.
And a move above 4,200 points would confirm an upward trend, he said in a statement.
"If this occurs, then I expect we will see a rise through to 4,300 points and, possibly, higher in the next month,'' he said.
The outcomes of the Greek and French elections, as well as concrete policy moves from Europe's leaders to support the continent's banks, will dictate when global share markets bottom, AMP Capital's chief economist, Dr Shane Oliver says.
He tips another round of monetary easing in Europe and the US, and more economic stimulus in China in coming months which should boost liquidity in financial markets and global growth.
Further interest rate cuts by Australia's central bank would also likely push the local share market higher by the end of the year, he said in a report released on Friday.
Unsurprisingly, global equities investment house, Fidelity Worldwide Investment, sees more opportunities for equities investors even in the context of lower global growth.
A break-up of the European Union triggered by Greece's debt crisis, and a possible abandonment of the euro, would pose just a "temporary dislocation'' for financial markets rather than a permanent negative impact on the global economy, Fidelity says.
"The negative impact from such a crisis of confidence would likely be very short term in nature and, if anything, would create a short-term buying opportunity,'' Fidelity's head of Australian equities, Paul Taylor, said.
He says shares are cheap because capital markets are sceptical and believe all regions, countries, sectors and companies will suffer in a low-growth environment.
Investors need to keep the faith and comb the market for opportunities, he adds.
"This is the ideal environment for individual stock selection.
"Markets are currently not differentiating between good and bad companies or high and low growth companies.''
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