Embracing stock markets’ all-time highs

STOCK markets’ ascent to new peaks ignites a potent mix of excitement and caution among investors. In the last few months, there has been a remarkable surge across financial markets worldwide, with even stalwart markets like Japan breaking free from the shackles of a three-decade-long bear market. Assets such as gold and Bitcoin have also hit new all-time highs.

Amid these gains, there have been two notable exceptions – Hong Kong and mainland China – which are mired in a multi-year bear market from the fallout of the debt bubble linked to real estate. Index values are back at prices last seen in 2006.

When faced with these choices, many investors see more opportunity in allocating to value markets like China, versus the frothy valuations seen in the US. Much has been written about the narrowness of the bull market in US equities, how all the gains are attributed to the Magnificent Seven, and how this is a negative signal. A closer examination reveals a more nuanced reality.