THE Australian and US equity markets have now been officially downgraded to "underweight" by Citi Australia, having run up past their December 2013 share index targets already.
Citi strategist Tony Brennan said price-earnings valuations in Australia had moved 10 per cent above their average over the past two decades, which were largely characterised by benign low inflation and low interest rates.
The US-owned group had already passed the same judgment on the US sharemarket, which has also passed Citi's December 2013 index target before the calendar year is half over.
Mr Brennan said that wasn't a criticism. "Australian equities have performed well and the global search for yield has intensified," he said.
"At the start of 2012 the dividend yield for Australian equities was 5.1 per cent, 220 basis points higher than the global average, and now it is 4.1 per cent, which is 150 points higher than the global average of 2.6 per cent."
