ANZ Smart Choice Super Investor Update : Member Update Spring 2013
10 International shares Returns varied across regions and sectors in the last quarter. The US share index, for example, finished near a record high level despite earlier tapering speculation. The global index of small company shares performed strongly as did the Japanese share market. By contrast, returns from emerging market shares, notably India, were lower. Australian fixed interest The local bond market index rose over the quarter, driven initially on by expectations of the RBA rate cut. Following the August interest rate cut, bond prices reflected global developments. International fixed interest Early in the quarter, tapering speculation, especially in the US, pushed down government bond prices (increasing the yield). In September, bond prices rose when markets realised there would be no immediate policy change. The JP Morgan Global Bond Index ended the quarter up 1.2%. Listed property Returns from listed property in the quarter, both in Australia and globally, were lower than those from comparable share market indices. This suggests that, while listed property offers income potential, valuations appear stretched. Currency The August rate cut in Australia helped push down the value of the Australian dollar as the RBA had hoped. During September, however, it recovered some value against the US dollar. One factor putting upward pressure on the dollar is strong residential housing sales which markets believe make further interest rate cuts less likely. Commodities Key commodity prices rose over the quarter. This was due in part to seasonal factors in the northern hemisphere and, more significantly, to stronger demand from China. The higher prices for coal and iron ore should benefit large mining companies in Australia and emerging markets including Brazil and South Africa. What does the remainder of 2013 hold? In Australia, markets will look to see whether the post-election spike in confidence flows through to investment, job hiring and stronger retail spending in the lead up to Christmas. Stronger housing sales and confidence make it unlikely we will see another interest rate cut this year. Job hiring decisions will be influenced by the Australian dollar which, worryingly, is creeping back to ‘over-valued’ territory. In the US, the outlook for the share market has been buoyed by Janet Yellen’s nomination as the US Federal Reserve Chair. Markets will be hoping that there is no further political wrangling about ‘debt and deficit’ leading into 2014. In Europe, Angela Merkel’s resounding election victory in Germany should help EU growth momentum. We believe European share markets offer good return potential. We remain cautious about the outlook for China and, by extension, emerging markets.
Member Update Winter 2013
Member Update Summer 2014