Global equity markets have continued their recovery from the sell-off after the United Kingdom’s Brexit vote. Bonds have also made gains as interest rates have fallen to even lower levels, particularly in the U.K. Lower bond yields, and ongoing zero or negative returns on cash, have further increased demand for yield-bearing asset classes like property and infrastructure. Emerging market assets have also become highly popular. Looking ahead, many of these asset classes are now outright expensive, and although the global economy continues to grow at a modest rate, prices are now even more vulnerable to any adverse economic or political shocks. In New Zealand, the business cycle is still robust and has been supporting further gains for equities and property.
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