GLOBAL equity markets have enjoyed a stellar start to 2013, building on the strong gains achieved in the second half of 2012.

Whilst politicians have yet to get to grips with the restructuring necessary to support longer term prosperity, investors can continue to take heart from the supportive roles played by Western central banks and the Bank of Japan.

Quantitative Easing (QE) has its critics, and they do have a point when they question the policy’s ability to generate meaningful growth in real GDP, but the lack of investing alternatives has ensured that the corporate sector has leveraged up and continues to return capital to shareholders through share buybacks and dividend payouts.

Global inflation pressure remains muted for the time being so, on some measures, the equity risk premium continues to support a significant asset allocation preference for equities over bonds. This could of course, imply that bonds are expensive just as much as it could imply that equities are cheap. On this matter the various juries are still out and one finds that different analysts provide completely contrasting opinions.

While the corporate sector has been meeting and in many cases beating previously lowered earnings expectations, guidance continues to reflect challenging operating conditions. The trend in earnings forecasts continues to the downside, albeit at a slower pace than that seen over 2012.

Recent equity market gains may provide opportunities for investors looking to maximise Capital Gains Tax exemption limits, whilst a near term correction might be regarded as a useful opportunity for longer term investors to put their cash balances to work.

: : Charles Sylvester is a stockbroker with Charles Stanley & Co in Ipswich.