Equity

In a study entitled “Assessing the Quality of Asian Stock Market Indices,” researchers at EDHEC-Risk Institute have reported results for 10 major Asian stock market indices over the past decade.

Confidence in a strong global economic outlook has consolidated while investors have indicated that they see support from current equity valuations after the recent rally, according to the BofA Merrill Lynch Fund Manager Survey for February.

Global investors have entered 2013 in buoyant but not yet exuberant mood, according to the BofA Merrill Lynch Fund Manager Survey for January. The new year sees asset allocators assigning more funds to equities than at any time since February 2011, while their confidence in the world’s economic outlook has reached its most positive level since April 2010.

From a purely dividend yield perspective, Western investors could diversify into emerging markets where dividend growth is supported by low levels of company debt coupled and high profitability.

Past results do not guarantee future performance. However, they certainly set the tone for predictions of it. A year ago, the outlook statements for this year’s equity performance were rather cautious, with forecasters extrapolating the poor trend of 2011. However, 2012 proved to be a good year and, unsurprisingly, the broker consensus is positive for 2013. Is this justified?