Now is a good time to consider growth stocks, because they are relatively cheap, AllianceBernstein Australia chief executive Michael Bargholz told Axa advisers in Sydney yesterday.
"Clients that are not thinking it's time to strategically rebalance regularly will find themselves overweight in Australian equities and value stock. They should move towards international and growth style investments," Bargholz said.
According to Bargholz, it is time to return to growth stocks. "Growth stocks at one stage [2000] were up to P/E of 110, now they're at a tiny multiple of where they were," he said.
"Value stocks are now relatively expensive."
The Australian market is more expensive than overseas equities. "We think that overseas equities look more attractive," Bargholz said.
"There are some opportunities rebalancing Australian equities to global."
Emerging markets were continuing to show strong growth. Asia, Eastern Europe and Latin America, he said.
Bargholz said he believed the budget had added another 1 per cent to GDP because of tax cuts and spending issues. "We think that's good news for the Australian economy," Bargholz said.
"There's been a slowing down in the US but we don't expect it will turn into a slowdown here, there's ongoing growth in China and India."
According to Bargolz, the Australian economy was decoupling from the US. "Only 10 per cent of our trade is with the US; it's well below China, Japan and the rest of Asia," he said.
"We think Australia and the US economies will remain decoupled. The bottom line is that the current slowdown in the US ticks all boxes for Australia not to follow the US lead."
