International Equities
Overview
Over the quarter ending 31 March 2012, the MSCI World (ex-Aust)
Index USD$ rose by 11.08%.
In our last update we wrote:
"Until a more comprehensive solution for the Eurozone
problems is found we expect global markets to remain directionless.
With Europe on the verge of a recession and the prospect of China
slowing, it is very difficult to mount a bullish case for global
equities despite reasonably attractive valuations."
The rally on global sharemarkets over the quarter shows how
wrong we were. What we did not count on was the success of the
ECB's Long Term Refinancing Operation (LTRO) where banks were
offered cheap loans for 3 years. As stated earlier, the 3 year LTRO
had the dual effect of reducing the short term risk of any EZ bank
failures and also reducing sovereign bond yields and thus reducing
the near term risk of a country default. LTRO's are nothing new
– the reason this initiative worked was because of
