A New Year dip in share markets by lindash


A New Year dip in share markets

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									                                                                                                                    January 2010

A New Year dip in share markets
Markets began 2010 in a positive             All industry sectors recorded negative      Property
way, but by mid month, this                  returns for the month of January.
                                                                                         Private investors, syndicates and
shifted dramatically with investors          It is expected that 2010 will be a          international institutions have driven an
becoming risk adverse due to                 challenging year for investors, with        early wave of sales in the property
                                             interest rates rising and high profit       sector in 2010. The domestic unlisted
concerns related to regulatory               growth expectations that need to be met
changes in the US banking                                                                property sector, as measured by the
                                             to justify further significant equity       Mercer Unlisted Property Index,
system, higher than expected                 market gains.                               returned 0.5% for the month of January
inflation in China and emerging                                                          with an annual return over five years of
issues related to foreign                    International Shares                        8.3%.
government (also known as                    The Chinese central bank tightening to
                                             slow down its economy, reforms to US        Fixed Interest
sovereign) risk, particularly in the
                                             regulations and increasing sovereign        The Australian bond market
Euro zone.                                   debt worries in Europe all contributed to   strengthened in January taking the lead
                                             falls in International equity markets       from the US. The three-year Australian
During the month the International           during January. During the month, the
Monetary Fund (IMF) upgraded its                                                         government bond yield dropped by
                                             Morgan Stanley Capital International        0.16% to 4.52% while the ten-year
global economic growth forecasts for         (MSCI) World ex-Australia Index
2010 from 3.1% to 3.9%, driven                                                           government bond dropped by 0.27% to
                                             returned -3.1% in Australian Dollar         5.39%. These moves resulted in the
predominantly by a stronger pace of          terms and -0.3% annual return over five
recovery from the global financial crisis.                                               UBSA Composite Bond Index returning
                                             years to the end of January.                1.3% during January with a five year
In Australia, our underlying inflation       Emerging markets also experienced a         annual return of 6%.
rose by 0.65% over the quarter to            pullback in January 2010, with the
December 2009, taking the annual rate                                                    Global bond yields moved lower in
                                             MSCI Emerging Markets Index                 January due to sovereign risk concerns
to 3.4%. The December 2009 labour            returning -4.5% in Australian dollar
market figures released in January                                                       and possible changes to the regulatory
                                             terms after a very strong year in 2009.     powers within the US financial system.
showed that 35,200 jobs were created
in December leading to a reduction in        In Europe continued concerns related to     Concerns were mainly attributed to the
the unemployment rate from 5.6% in           sovereign debt risk, with the immediate     credit worthiness of Greece and rising
November 2009 to 5.5%. Importantly,          focus currently on Greece, led to           government debt levels in Europe.
the number of full-time employed             weaker markets through most of
persons increased for the second             Europe. Share markets in Germany            Cash
month in a row after dropping                (-5.9%), France (-5.0%) and Spain           The UBSA Bank Bill Index increased
consistently since mid-2008.                 (-8.9%) fell as details of debt levels in   0.3% for the month, with a five-year
                                             Euro zone economies emerged during          average annual return of 5.9%.
Australian Shares                            the month. In Asia, moves by policy
                                             makers to raise reserve requirements        The Australian dollar was weaker in
After a strong start to the year, the        for banks and to place limits on lending    January against the US Dollar, British
Australian share market struggled in         led to weaker markets in Hong Kong          pound, Japanese Yen and the trade-
January, with the S&P/ASX 300                (-6.4%), Singapore (-6.0%) and China        weighted index (TWI), but stronger
Accumulation index declining by 6.2%.        (-8.5%).                                    against the Euro.
The S&P/ASX 300 Accumulation index
has now returned 18% for the financial
year to the end of January 2010 and
6.6% per annum over five years. The
S&P/ASX Small Ordinaries Index
returned -7.4% during January.
Performance of the main investment markets to 31 January 2010
 Major Index Performance                                                           1 Month          3 Months         1 Year      3 Years pa
 Australian Shares (S&P/ASX 300 Accumulation Index)                                 -6.17%             -0.95%        35.67%         -3.47%
 International Shares (MSCI AC World (ex Australia))                                -3.09%             3.52%         -0.11%        -10.69%
 Emerging Markets (MSCI Emerging Markets)                                           -4.46%             4.07%         28.91%         -1.15%
 Unlisted Property (Mercer/IPD Unlisted Property Index)                             0.50%              0.23%         -8.80%         3.21%
 Listed Property (S&P/ASX 300 Property Trust Accumulation Index)                    -2.98%             1.28%         17.59%         -4.84%
 Australian Fixed Interest (UBSA Composite All Maturities Bond Index)               1.35%              2.47%         1.67%          6.87%
 International Fixed Interest (Citigroup World Government Bond Index)               0.92%              1.40%         6.31%          8.35%
 Cash (UBSA Bank Bill Index)                                                        0.35%              0.98%         3.42%          5.85%
Major index data is gross of fees and taxes.

Performance of AustralianSuper’s investment options to 31 January 2010
                                                       Bench                   Bench         3 Years       Bench       5 Years       Bench
 Investment option                     3 Months
                                                                 1 Year
                                                                               mark             pa         mark           pa         mark
 PreMixed Options
 High Growth                            0.90%          1.41%     11.01%       16.33%         -3.55%        -3.90%       4.39%        3.89%
 Balanced                               1.66%          1.34%     9.01%        12.66%         -1.36%        -2.05%       5.26%        4.30%
 Sustainable Balanced                   0.08%          1.34%     16.80%       12.66%         -0.82%        -2.05%       4.60%        4.30%
 Conservative Balanced                  1.36%          1.66%     7.73%        11.92%            -               -          -            -
 Stable                                 1.32%          1.54%     6.14%         8.90%         3.01%          1.95%       5.33%        4.58%
 Capital Guaranteed                     0.70%          0.71%     2.31%         2.46%         4.29%          4.53%       4.58%        4.56%
 DIY Options
 Australian Shares                      1.11%         -0.96%     35.29%       30.84%         -1.62%        -3.55%       7.28%        5.33%
 International Shares                   0.81%          2.92%     6.52%         -1.17%        -9.32%        -10.62%      0.43%        -1.29%
 Australian Sustainable Shares          -0.93%        -0.98%     73.52%       30.77%         0.42%         -3.62%       7.81%        5.26%
 International Sustainable
                                        -1.87%         0.62%     3.17%         -4.44%        -12.26%       -10.92%     -2.67%        -1.95%
 Property                               0.37%          0.04%     -10.72%       -8.58%        -0.35%         2.23%       4.72%        6.77%
 Australian Fixed Interest              2.11%          2.05%     1.28%         1.29%         4.43%          5.66%       4.52%        4.92%
 Diversified Fixed Interest             1.91%          1.83%     6.70%         3.07%         4.91%          6.15%       4.68%        5.23%
 International Fixed Interest           -0.64%         1.15%     2.69%         5.14%         1.50%          6.93%       3.08%        5.82%
 Cash                                      0.92%         0.80%   3.25%         2.82%         5.24%          4.88%       5.23%        4.92%
Crediting rates in this table are net of fees and taxes.
Benchmarks: High Growth – SR50 Median Growth Option; Balanced – SR50 Median Balanced Option; Sustainable Balanced – SR50 Median
Balanced Option; Conservative Balanced – SR25 Median Conservative Balanced Option; Stable – SR50 Median Capital Stable Option; Capital
Guaranteed – UBSA Bank Bill Index adjusted for fees and tax; Australian Shares – S&P/ASX300 Accumulation Index adjusted for fees and tax;
International Shares – MSCI AC World ex Australia (in $A) Index adjusted for fees and tax; Australian Sustainable Shares – S&P/ASX300
Accumulation Index adjusted for fees and tax; International Sustainable Shares – MSCI World Net Dividend Reinvested Unhedged to AUD
adjusted for fees and tax; Property – Mercer/IPD Unlisted Property Index adjusted for fees and tax; Australian Fixed Interest – UBSA Composite
All Maturities Bond Index adjusted for fees and tax; Diversified Fixed Interest – [50% UBSA Composite All Maturities Bond Index + 50% Barclays
Global Aggregate Index hedged to AUD] adjusted for fees and tax; International Fixed Interest – Citigroup WGB Hedged Index adjusted for fees
and tax; Cash – UBSA Bank Bill Index adjusted for fees and tax.

This document was prepared by AustralianSuper using underlying market commentary provided by Frontier Investment Consulting Pty Ltd (ABN
21 074 287 406). Frontier prepared the underlying market commentary for its wholesale clients on the basis of information supplied from other
sources. While that information is believed to be reliable, no responsibility for errors or omissions is accepted by Frontier.
This document was prepared by AustralianSuper in February 2010. This document is of a general nature and does not take into account your
personal objectives, situation or needs. Before making a decision about AustralianSuper, consider your financial requirements and read our
Product Disclosure Statement, available at www.australiansuper.com/Forms/Publications or by calling 1300 300 273. AustralianSuper Pty Ltd.
ABN 94 006 457 987 AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898. ‘Industry Superfund’ logo used with permission of Industry
Fund Services (IFS).This consent had not been withdrawn at the date of publication. Investment returns are not guaranteed as all investments
carry some risk. Past performance gives no indication of future returns.

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