Stocks see 'helping hand' from US officials
An investment manager says officials in the United States may be trying to inflate the share market to restore investor confidence, as US stocks soar and Australia's benchmark index wavers.
Local share market investors have had a rough 12 months, with Australia's ASX 200 index down 1 per cent for the 12 months to March 16.
But in the United States, where economic conditions are far tougher, the Dow Jones Industrial Average is up more than 10 per cent in the same period.
Analysts say Australia's index is heavily weighted towards mining shares and banks, which have not put in a strong performance recently.
But investment manager Roger Montgomery also says there appears to have been a concerted effort by US authorities to inflate the share market in an attempt to inspire confidence.
He points to strong gains in several key shares despite figures showing low levels of market participation.
"That suggests to me that there may be some official buying of stocks, particularly high beta stocks or the most volatile stocks that are likely to drive indices higher," Mr Montgomery said.
"In terms of real audience participation there's not a lot. It's a bit like a concert that no one's turning up to, and that's what's happening in the United States at the moment."
The global financial crisis came about in large part because of an extraordinary housing bubble in the United States that had no real substance.
Full story here
Local share market investors have had a rough 12 months, with Australia's ASX 200 index down 1 per cent for the 12 months to March 16.
But in the United States, where economic conditions are far tougher, the Dow Jones Industrial Average is up more than 10 per cent in the same period.
Analysts say Australia's index is heavily weighted towards mining shares and banks, which have not put in a strong performance recently.
But investment manager Roger Montgomery also says there appears to have been a concerted effort by US authorities to inflate the share market in an attempt to inspire confidence.
He points to strong gains in several key shares despite figures showing low levels of market participation.
"That suggests to me that there may be some official buying of stocks, particularly high beta stocks or the most volatile stocks that are likely to drive indices higher," Mr Montgomery said.
"In terms of real audience participation there's not a lot. It's a bit like a concert that no one's turning up to, and that's what's happening in the United States at the moment."
The global financial crisis came about in large part because of an extraordinary housing bubble in the United States that had no real substance.
Full story here
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