Bears prowling on Aussie equities

Peter Gunning

More than half of the fund managers surveyed in the latest Russell Investment Manager Outlook (IMO) survey believe Australian equities are overvalued.

The June quarterly survey of 50 Australian fund managers recorded a growth in bearishness for Australian equities and a continued preference for international stocks.

Despite the bearish trend, however, the survey found a record high numbers of managers are bullish on the resources sector, particularly on energy and materials.

Bullish views on energy increased to a record 63 per cent from 49 per cent last quarter, with bears at an all time low of just 18 per cent, according to Russell’s chief investment officer, Asia Pacific, Peter Gunning.

He said bulls rose from 43 per cent to 57 per cent on materials quarter on quarter.

Another key survey finding that fund manager’s preference for global shares over domestic equities as offering greater value “proved to be a recurring theme”, he said.

“In the June quarter 57 per cent of managers remained bullish on the 12-month outlook for international equities — a number largely unchanged since the first Russell IMO in June 2005.”

The prognoses on the outlook for Australian bonds, LPTs and small cap Aussie equities “remain bearish” in the latest IMO, he added.

Sentiment also remains “strongly bearish” on consumer discretionary, industrials, telecommunications and utilities and bullish on consumer staples, health care and financials.