Cheap stock markets in Australia and China, combined with solid economic fundamentals, make a compelling case for equities investment at home and in Asia's biggest market, Fidelity portfolio managers said.
"If you think about buying Aussie equities now, I don't think any of us are jumping out of bed in the morning," Fidelity portfolio manager, Australian equities, Kate Howitt said.
Howitt said Australian equities had fallen deeply out of favour compared to their halcyon days of 2006 and 2007.
"These days, it feels more like an ugly contest. People have superannuation or they have savings or they know they're going to get to retirement - but how are they going to get there? Nothing is looking particularly attractive," she said.
She said bond yields were too low, and the likelihood of interest-rate cuts and an absence of capital growth dulled the lustre of cash and term deposits, which were yielding about 5 per cent.
As for property, Australian household debt to income ratios have run up a long way, signalling a cooling or stabilisation of housing prices.
"Then you come back to equities. We've now got a 5.5 per cent market yield. If you confine yourself to the [four major] banks and Telstra, it's 8.5 per cent yield. Plus they have the potential for capital appreciation. Now, that's not a bad starting point," she added.
In terms of Asian equities, Fidelity Asia Fund portfolio manager David Urquhart said China was extremely cheap, given its attractive fundamentals.
With China's retail sales growth near 20 per cent even as the government successfully tames inflation, talk of a hard economic landing there is way overblown, Urquhart said.
"All of the risks are already priced in," he said, adding China share prices were trading at about 8 times earnings.
Same-store retail sales data, which strip out contributions from new stores, stood at 18 per cent, manufacturing data has been positive for the past three months, and government economic policy has, overall, been positive.
"They've got the inflation genie back in the bottle, and I think we'll see further steps where they can ease off from what has been an extraordinarily tight monetary policy. That's good for the economy and it's good for the companies," he added.
