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Chart of Economic Growth the Year Following an Election - PowerPoint

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					BT Monthly Markets
Chart Pack – November
2007
An overview of movements in global financial markets
Global markets give some back in November



 November saw global share markets fall sharply
  from last month’s highs as fears of a US recession and
  ongoing concerns over global credit markets spooked
  investors. However, further talk of a rate cut in the US
  provided a welcomed rally leading into month-end and
  helped markets pare back some of their earlier losses.

 In line with global share markets, the local market all
  but gave up last month’s gains, with the S&P/ASX 300
  Accumulation Index closing November down 2.89%. The
  Australian market fell largely on the back of a weak lead
  from the US and concerns over the global economic
  outlook.




2
The Australian share market came off its recent
highs in November

S&P/ASX 300 Accumulation Index – Six months to 30 November 2007

    43,000

    42,000

    41,000

    40,000

    39,000

    38,000

    37,000

    36,000

    35,000
       31/05/2007      30/06/2007        31/07/2007   31/08/2007   30/09/2007   31/10/2007   30/11/2007

Source: BT Financial Group, Datastream



3
Key Australian economic news – November

 The Reserve Bank of Australia (RBA) left interest rates on hold following its
  early December meeting – its last for 2007. The decision to leave the
  benchmark rate at 6.75% had been widely expected given recent financial
  market turmoil, though the bank still retains a tightening bias.

 The Labor Government won the Federal Election in November, though this is
  expected to have little effect on investment markets as the Labor Party is
  committed to similar macroeconomic policies to the previous government.

 October employment figures were a little weaker than expected, with the
  unemployment rate rising slightly from 4.2% to 4.3%.

 Both the current account balance and retail sales came in below market
  expectations in October.


Source: BT Financial Group




4
The Australian dollar weaker against major
currencies



 The Australian dollar (A$) was weaker against the major currencies in
  November amid concerns over the global economic outlook and the impact
  that slower growth would have on commodity prices. Nonetheless, the A$
  remains at elevated levels and, notwithstanding a significant slowdown in
  global growth, this trend is likely to continue.

 At the end of November:

             A$1 bought      US$0.8871       -5.3%

                             €0.6043         -6.3%

                             ¥98.37          -8.8%

Source: BT Financial Group



5
The Australian dollar versus the US dollar…

Currency markets – A$ per US dollar

     1.0000

     0.9500

     0.9000

     0.8500

     0.8000

     0.7500

     0.7000

     0.6500

     0.6000

     0.5500

     0.5000
          Nov-02    May-03   Nov-03    May-04   Nov-04     May-05   Nov-05   May-06   Nov-06   May-07   Nov-07

Source: BT Financial Group. Figures at 30 November 2007.



6
the Euro…

Currency markets – A$ per Euro
    0.6500

    0.6350

    0.6200

    0.6050

    0.5900

    0.5750

    0.5600

    0.5450

    0.5300
         Nov-02     May-03   Nov-03    May-04   Nov-04     May-05   Nov-05   May-06   Nov-06   May-07   Nov-07
Source: BT Financial Group. Figures at 30 November 2007.



7
and the Yen

Currency markets – A$ per Yen
     110

     105

     100

      95

      90

      85

      80

      75

      70

      65

      60
       Nov-02     May-03   Nov-03    May-04    Nov-04      May-05   Nov-05   May-06   Nov-06   May-07   Nov-07
Source: BT Financial Group. Figures at 30 November 2007.



8
Official world interest rate movements – November



 The European Central Bank, the Bank of Japan and the Bank of England all left
  interest rates on hold in November. The US Federal Reserve (Fed) didn’t meet in
  November – the Fed’s next meeting is on 11 December, when its expected to cut
  rates a further 0.25%.
                                                                   Direction of
                                 Current rate    Last moved        last move
               Australia          6.75%           Nov 2007
               US                 4.50%           Oct 2007
               Europe (ECB)       4.00%           Jun 2007
               Japan              0.50%           Feb 2007
               United Kingdom     5.75%           Jul 2007


Source: BT Financial Group



9
World growth is expected to be 3.6% this year and
a further 3.4% in 2008.

2007 world growth estimates

                      Month of estimate

                      Apr 07       May 07   Jun 07   Jul 07   Aug 07   Sep 07   Oct 07   Nov 07
Australia                3.1%        3.3%    3.8%     3.9%      3.8%    4.1%     4.2%     4.3%
US                       2.3%        2.1%    2.1%     2.1%      1.9%    2.0%     2.0%     2.1%
Japan                    2.2%        2.2%    2.3%     2.5%      2.4%    2.3%     2.0%     1.9%
China                   10.0%       10.3%   10.4%    10.5%     11.3%    11.3%   11.4%     11.3%
Germany                  2.1%        2.4%    2.7%     2.7%      2.7%    2.6%     2.6%     2.6%

UK                       2.6%        2.7%    2.7%     2.8%      2.8%    2.8%     2.9%     3.0%

World                    3.3%        3.3%    3.4%     3.4%      3.4%    3.6%     3.6%     3.6%


     Source: Consensus Economics



10
Global share market returns

30 November 2007

                                    1 year   3 years (pa)   5 years (pa)
        Global
        S&P 500 Index (US)          5.75%         8.06%          9.61%
        Nasdaq (US Tech.)           9.42%         8.27%         12.47%
        Nikkei 225 (Japan)         -3.65%        12.89%         11.22%
        Hang Seng (Hong Kong)      51.07%        26.77%         23.25%
        DAX (Germany)              24.75%        24.02%         18.71%
        CAC (France)                6.44%        14.74%         11.26%
        FTSE 100 (UK)              6.34%         11.00%          9.06%
        Australia
        S&P/ASX 300 Accum. Ind.    23.75%        23.36%         21.37%
        S&P/ASX Small Ordinaries   24.80%        24.28%         26.82%
        S&P/ASX 300 Listed Prop.   5.19%         15.95%         16.71%

Source: BT Financial Group



11
Short-term asset class performance
1-year rolling returns to 30 November 2007 (%)                                                                                 Best performing
                                                                                                                               asset class for the
                                                                                                                               year




                2007     2006    2005     2004    2003     2002     2001     2000    1999     1998    1997    1996     1995    1994     1993    1992

Australian
                 6.66     5.96    5.72     5.61    4.86     4.71     5.42     6.18    4.97     5.15    5.79    7.62     7.97    5.20     5.48    7.16
cash

Australian
                 3.32     4.41    4.81     8.86    3.54     5.50     8.35     9.38    -0.28   10.30   11.28   12.40    19.91    -5.21   16.83   11.87
bonds

Australian
                 5.19    31.67   12.54    29.85    6.97    12.45    18.45    15.33    -5.05   20.45   16.94   18.41    11.74    -0.98   23.65   13.28
property

Australian
shares          23.75    23.83   22.50    28.69    9.02     -4.70    5.50    14.03   15.29    15.02    7.91   14.75    19.93    -2.67   39.65    -7.24

International
                 -2.31    2.52    -1.81    5.21    -9.95    2.69     6.42    18.28    -3.16   22.62   18.70    -3.63   22.02   -11.68   16.97   26.80
bonds

International
                 0.01    12.56   16.40     9.15    -7.78   -21.75   -15.34   11.66   20.05    30.70   34.44    8.36    22.45    -6.40   21.65   16.30
shares




Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property
Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$



12
Short-term asset class performance (cont’d)
1-year returns to 30 November 2007 (%)
                                                                                                   30 November 2006
                                                                                                   30 November 2007


                                                 4.4
         Australian bonds
                                                3.3

                                                                                                 31.7
         Listed property
                                                     5.2

         Australian shares                                                         23.8
                                                                                   23.8

         Global bonds                          2.5
                              -2.3

         Global shares                                         12.6
                                         0.0

Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property
Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$



13
Long-term asset class performance
30 November 2007
$24,000
$22,500                                                                                                                      Australian shares
$21,000
$19,500
$18,000                                                                                                                      Listed property
$16,500
$15,000
$13,500
$12,000                                                                                                                      Global shares
$10,500
 $9,000                                                                                                                      Australian bonds
 $7,500
 $6,000
                                                                                                                             Cash
 $4,500
 $3,000
 $1,500
     $0
          85   86   87   88   89   90   91   92   93   94   95   96   97   98   99   00   01   02   03   04   05   06   07

Note: Accumulated returns based on $1,000 invested in December 1984
Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property
Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$



14
Crude hit a record US$99.29 a barrel in November
before closing the month lower at US$88.71.
Oil prices – US$ per barrel

     $100

      $90

      $80

      $70

      $60

      $50

      $40

      $30

      $20

      $10

        $0
             87   88   89   90   91   92   93   94   95   96   97   98   99   00     01   02   03   04   05   06   07
Source: BT Financial Group. West Texas Intermediate oil price at 30 November 2007.



15
Summary

    World economic growth remains sound, though the chances of a recession in the
     US has increased recently and this will pose a risk to future growth.

    The underlying strength of the Australian economy looks set to continue, though any
     significant deterioration in global growth will obviously have an adverse effect locally.

    Despite the RBA’s decision to leave interest rates on hold, we may yet see a further
     rate hike in early 2008 if inflation pushes higher in the December quarter.

    The Australian dollar may fall further in the short-term should global growth begin to
     slow but is likely to remain at elevated levels.

    Gains in global share markets, including here in Australia, will likely slow over the
     coming months.




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but exclude the entry fee. It is important to note that past performance is not a reliable indicator of future performance.
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