Since October last year, the market has run a further 33 percent, led by India and China.
Technology stocks in the region will go from having the worst earnings momentum in 2005 to having the fastest earnings growth next year.
The issue here is what happens to corporate profitability. What we've found irritating in a way about the Chinese market is the lack of investment opportunities, to find companies that are isolated from this investment cycle.
Australia is still a safe place to be. What we're looking for is earnings streams that are defensive and relatively immune to the capital expenditure cycle that's going on in China. The second thing we're looking for is management that's willing to give cash back to shareholders.
In times like this, you need to be focused on economies around the world where there's scope for policy response into an economic slowdown. There are a number of factors that we like about the Australian market.
