Column: Allan Williams

The world economy is recovering from the recession at dual speeds, with developed countries still weak while some emerging economies are already operating at full capacity.
The outlook for global shares
Global developed equity markets have performed strongly in the last six months, fuelled by continuing positive economic data. Expect a rougher ride for the rest of the year, within a positive trend. Global shares are one of our preferred investment classes.
Emerging markets continue ascent
Emerging market equities have struggled over the last quarter, as rising inflation pressures and tighter monetary policy have prompted investors to take profits.
Australian shares have a solid base
Australian equities continue to underperform. This reflects less stimulatory monetary policy, relative to the major countries, and strong exchange rates. Resource and mining shares remain attractive, providing a solid foundation for profit growth. Australian shares are currently a preferred investment class.

New Zealand lacklustre
Earnings growth is expected to be a sluggish 3 per cent in 2011, reflecting the lack of any decent economic recovery. The New Zealand market is likely to continue underperforming during the recovery.

Property and infrastructure
New Zealand listed property remains the laggard of growth assets, while globally listed property is performing in line with global equities across the year to date. With infrastructure, the global economic recovery is expected to continue supporting infrastructure fundamentals, including increases in energy demand, traffic on roads and railways and import/export activity.

Commodities are strong
Commodity prices have continued their strong upward momentum on the back of the global economic recovery, adverse climatic conditions which are disrupting the supply of agricultural products and political instability in North Africa and the Middle East.
Agricultural prices were up about 70 per cent in the past seven months, the price of crude oil was up about 50 per cent and industrial metals rose by around 35 per cent.
International bonds up, domestic bonds down
Global bond rates have been rising since October, with a simple average of United States, Germany, United Kingdom and Japan government 10-year rates up about 0.8 per cent due to much better economic data. This suggests the global economic recovery is strengthening and broadening. In New Zealand, rates have been under downward pressure, reflecting weaker economic dataflow and a disappointing economic recovery relative to market expectations.
New Zealand dollar up in March and down for the quarter
The New Zealand dollar traded a wide range during the last quarter - between US$0.71 and US$0.76. For the quarter, the dollar was weaker against most currencies, but it was very strong on the close of last year, so the fall was off a very high base.

- Allan Williams is an adviser with Spicers Portfolio Management