Our assessment remains that Australian shares will continue to outperform mainstream global shares thanks to a combination of higher dividend yields and slightly stronger earnings growth.
Our assessment is that Australian shares will continue to outperform mainstream global shares over the next year, thanks to a combination of higher dividend yields, slightly stronger earnings growth (helped of course by the resources sector) and franking credits.
The fact that Australian shares are now trading on a similar pe to global shares does not indicate that they are overvalued or that global shares now offer better return prospects.
An upside risk for Australian shares though is that a bubble forms on the back of enthusiasm for China and resources stocks.
The general picture is for a substantial performance in Asian shares as consumer spending in Japan and China, in particular, fuels profit growth.