ANZ Smart Choice Super Investor Update : Investor Update 2012
8 Australian dollar This time last year I suggested the Australian dollar would fall back below US dollar parity, which it has recently done. That said, it has spent much of the year above the US dollar parity. I stand by a ‘below parity’ view for three reasons. Firstly, the downward pressure on interest rates makes the Australian dollar less attractive to investors. Secondly, softening commodity prices and their impact on mining and resources. Finally, until there is a decisive resolution about Europe, the continuing jitters and a ‘flight to safety’ will push up the US dollar. International Fixed Interest International Fixed Interest performed very strongly over 2011/12. Bonds have benefited from the flight to safety in the face of persistent concerns over Eurozone sovereign debt. This has driven down yields on ‘safe haven’ country bonds such as German Bunds and 10-year US Treasury Bonds. Looking ahead, the international fixed interest market will likely continue to be dominated by developments regarding the sovereign situation in Europe. Predicting an outcome for this is tough. International shares Global share markets have been affected by continuing worries about Europe, weaker economic data from the US and the potential for slowdown in the pace of growth in economies like China. Some analysts cite the underwhelming IPO of Facebook as a sign that an emerging ‘tech bubble’ has burst. While US balance sheets are healthy, we believe these macroeconomic issues still remain significant, despite strong profit generation and balance sheet strengthening by US companies. Commodities There has been a dramatic softening in the prices of key commodity and metals, recently prompting some to declare boldly that the ‘boom is over’. What is clear is that lower growth forecasts from China, and more recently India, together with high inventories in China, suggest prices are unlikely to regain their recent peak in the short term. Even if the peak of the China growth cycle is behind us, continued Chinese infrastructure spending and recovery in developed economies will underpin a steady demand and help keep prices at their historically high levels.
Member Update Autumn 2013