Are investors facing an equity bubble?

ON UK GROWTH

The first few months of 2013 have witnessed an inexorable rise in global equity markets, and the UK has been no different. Investors have been seduced by a continuous supply of cheap money, as existing quantitative easing (QE) measures have been extended and new schemes have commenced.

With other asset classes having little appeal, equities have become the least worst option for many. Whilst it is always pleasant for a fund manager to be commenting on rising markets, there must now be a concern that an investment bubble is developing. The impact of QE is becoming far reaching, with many asset classes and markets being pushed beyond their fundamental valuations. The problem is that QE is a blunt instrument, with its sponsors having no control of how their initiatives will impact specific parts of the economy. As asset prices rise, there is a flurry of activity by mar...