At yesterday’s Perfecting Investment Portfolios event in Auckland, where the major topics were demographics, deleveraging and commodities, Glass looked at where investors, advisers and managers might find good value in the current market.

One place to look, he said, was in international equities, with corporate earnings globally in “pretty good shape”; earnings per share on S&P 500 stocks will hit a record high this year.

However, he said some stock markets represent better value than others when looked at through measures such as price to earnings ratios.

“One of the markets that has remained fairly expensive is the New Zealand market,” he said.

The key reasons for this, he said, are: New Zealand is “a bit of a backwater market with only a handful of stocks”; that New Zealand is a high-yield market, and; the “reasonably strong” KiwiSaver flows into the market.

But those looking for attractive valuations on shares need only look across the Tasman, where Australian shares offer “good value” according to Glass.

“Globally the hunt is on for yield; with the collapse in bond rates investors are desperate for yields. Australia is at the top of the pile and actually slightly higher than New Zealand dividend yields,” he said.

“This seems to be absolute mispricing as the Australian economy seems likely to continue to grow at significantly higher levels than New Zealand in the next 20 years.  New Zealand stocks are trading at a 20% relative price to earnings premium to the Australian market.”

Glass noted that the Australian share market has been down two years in a row and is in negative territory so far this year; the last time the Aussie market fell three calendar years in a row was in 1893.