Australian shares playing catch up on global peers

Australian shares playing catch up on global peers. The backdrop for equities remains favorable as renewed and somewhat coordinated monetary easy across the globe has sent many international indices to all time highs. Having underperformed the US share market for 5 years Australian shares have started playing catch up. The market rally is likely to continue as interest from offshore investors is stirred by RBA action and the 25% fall in the AUD. Domestic institutions are net buyers of the market as conservative positioning in late CY14 saw many caught with too much cash. Finding cheap stocks is a challenge but there are still many opportunities with balanced risk reward scenarios. The US market has been a material underperformer year to date with the S&P500 rising only +2%, lagging Europe where the German DAX and Italian MIB are up +16% and +17% respectfully. This is likely to continue until concern around the timing and trajectory of interest rate rises in the US becomes clearer in the September Quarter 2015.