REAL ESTATE – Real estate is no longer outperforming equities, despite continued strong money flows, says Merrill Lynch.
“The start of 2006 has been strongly positive both for global equity markets and property shares,” Merrill said in a research note.
But it said the chart of relative performance against local equities shows that real estate’s outperformance “would appear to have ended”.
“Real estate is no longer performing against equities,” it added.
“With the single exception of the Australian LPTs [listed property trusts], there was a surprisingly uniform return of between 4% and 5% for January with Singapore and Hong Kong edging ahead at plus 8%.
“However, looking more deeply, there was a pause in price moves for most of the month, with most of the gains coming in the last week.”
The firm has had an underperform rating on Australia for a few months - “so perhaps it is no surprise that the stocks have marked time, with investors looking further afield for value”.
Merrill said the “common themes” are equity issuance and money flows – “both being strong, we think there is likely to be a continued high activity rate in markets although we sense that equity issuance will eventually dominate”.