Cash holdings remain high while market claws back ground
Cash holdings have remained high among investors despite evidence of a sustained rebound in world share markets, according to the head of investment strategy at UBS, George Boubouras.
Boubouras claimed the rally in the market is the start of a longer upward trend that will occur across most global share markets.
Australia, Britain, the United States, Europe, Japan, Hong Kong and China will benefit from the trend as investors look to leverage their exposure in the years ahead, he said.
The 3,120 basis point mark in March was the lowest point in 2009, and markets will move to more normal valuations over the next 12 months, Boubouras said. The share market has rallied 38 per cent since March.
However, many investors are still stranded in cash while global equity has rebounded, with the cash weightings for super funds, institutional funds and private clients hitting record levels. Cash has also been falling, but it still remains above long run average levels, Boubouras said.
The equity market has already discounted further deleveraging, and investors in cash will look to enter the market if there is a pullback, he said.
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