Assessing companies on an individual basis will be more important than taking a top-down regional approach to investing in the aftermath of the global economic downturn, according to Axa Australia chief investment officer Mark Dutton.
“You don’t want to base your investment decisions on a top-down view where countries or regions that are going to drive growth will in turn present the best investment opportunities,” Dutton said.
“These regions could drive fantastic investment opportunities for companies that are somewhere else. The stock exchange the company happens to be listed on is totally irrelevant,” he said.
Dutton cited the example of pharmaceutical companies as a case in point where some of the best organisations to invest in are listed on stock exchanges in Europe, with some in the US and some in Japan.
“You don’t want to use that as your screening criteria – you want to look at the company and say who’s got the benefit,” Dutton said.
This required change in investment attitudes is part of what investors have to do to adapt to the “new normal” economic environment, he said.
In the “new normal” economic growth is being driven by the developing economies and not the developed ones.
High government intervention is another characteristic of the “new normal,” combined with a significantly large public debt.
Also, market returns are expected to be subdued to good as opposed to very good during the bull market.
“For me the ‘new normal’ is not an awful time at all – it’s just not a ridiculously good time,” Dutton said.
