The information contained in this section of the website is provided in good faith as general educational material only and, where applicable, is based on stated assumptions. Any information provided or derived from examples or calculators should not be relied on as a true representation of any actual superannuation entitlements or benefits from any particular fund or scheme.

The information and material on this website is to assist you to gain a broad understanding of superannuation and other general financial matters, is provided for general information only, and has been prepared without taking into account your particular financial needs, circumstances and objectives.  You should not rely on any information or material on this website, and before making any investment decision we recommend that you consider whether it is appropriate to your situation and seek appropriate financial, taxation and legal advice.

Links and frames connecting this website to other websites are provided for your convenience only, and do not mean that Guild Trustee Services Pty Ltd or Guild Financial Services Limited endorse or approve those other websites or their content.

Guild Trustee Services Pty Ltd (the Trustee of Child Care Super), Guild Financial Services Limited and their directors, officers, employees and agents make no representations and give no warranties in respect of, and to the extent permitted by law, exclude all express or implied representations and warranties in relation to, this website and/or the accuracy, currency or completeness of any information or material provided at or through this website.

Please select one of the following:
Home Cash Karma Latest News Investment commentary - 31 March 2012

Sunday, 15 April 2012 00:00

Attention: open in a new window. Print

Investment commentary - 31 March 2012

Provided by Mercer. The information in this article does not necessarily reflect the views of the Trustee.

Despite familiar headwinds, global markets continued their upbeat trend in March, predominately boosted by data that suggested a strengthening US economy, and the easing of the euro zone debt tensions.

Investors reacted negatively to Chinas decision to cut the official GDP growth target from 8.0% to 7.5% and markets returns were dampened by rising oil prices resulting from political tensions in the Middle East. Locally, equities performed marginally better than bonds, and the RBA decided to leave the official cash rate at 4.25%.

Significant developments over the month were:

  • The Board of the Reserve Bank of Australia left the official cash rate unchanged at 4.25%. The minutes suggested that despite global concerns relating to the euro zone debt crisis and the slowdown in East-Asia, Australian GDP and CPI figures were expected to track within their target ranges.
  • Domestic unemployment remained steady at 5.2% (trend estimate).
  • The US economy continues to strengthen as their labour markets improves, with seasonally adjusted unemployment rates holding at a three year low of 8.2% in March. However, caution still remains over the sustainability of U.S economic expansion, especially given the rising instability in the Middle East and subsequent oil price surge.
  • The Chinese government revised GDP growth targets for 2012 downwards from 8.0% to 7.5%. This raised concerns over Chinas future impact on the global economy given the country experienced 9.2% GDP expansion last year. The drop in HSBC PMI Index from 49.7 to 48.3 in March added concerns to the slowdown in Chinas economic activity, which signalled a fifth successive month-on-month deterioration in the Chinese manufacturing operations.
  • Sovereign bond auctions and the resultant sharp increase in Spanish and Italian yields demonstrated that despite finalising a second Greek bailout, the euro zone sovereign debt crisis remains as a concern for investors. To alleviate rising concerns of contagion, euro zone finance ministers have proposed extending the funding capacity of the European Financial Stability Fund and the European Stability Mechanism.
  • Owing to rising political tensions in the Middle East, oil prices remain relatively high, although slightly lower from previous month, finishing March at US$103.0/bbl, down 3.8% for the month. Gold also dropped during the month, returning -4.1% and settling at US$1,663.80/oz.


Australian Shares

The local market had a positive month, despite the mixed offshore data. The S&P/ASX 300 Index returned +1.2% for the month, building on a positive trend in previous months to finish the quarter up 8.6%. Large Cap stocks (+1.5%) outperformed their Mid Cap (+0.3%) and Small Cap (+0.2%) counterparts. Defensive plays were preferred during the month, and dominating the returns of the bourse was the Financials (ex property) sector, which contributed +1.2% to the overall Index return. Other top performing sectors for the month were IT (+13.3%), Healthcare (+7.5%) and Utilities (+5.8%) sectors. Underlying the performance of these sectors, were strong returns from ANZ (+6.5%), Westpac (+5.4%), QBE (+22.3%), CSL (+9.7) and Macquarie Group (+9.2%).

Overseas Shares

In local currency terms, the MSCI World ex Australia Index returned +1.8%. Unhedged investors benefitted from the depreciation of the Australian dollar over the month, with the unhedged benchmark returning +5.8%. Growth (+6.0%) outperformed Value (+5.5%) stocks in A$ terms based on the S&P Developed ex-Australia Large Medium Cap Value and Growth indices. Emerging markets returned +0.8% in A$ terms over the month (as measured by the MSCI Emerging Markets Index).

In the US, the S&P 500 Composite Index returned +3.3%, the Dow Jones Industrial Index was up 2.2% whilst the NASDAQ Composite Index increased by 4.2%, in local currency terms. In Europe, the DAX 30 (Germany) returned +1.3% however the FTSE 100 (UK) was down 1.3%, and the CAC 40 (France) returned -0.6%, all in local currency terms. Asian markets, with the exception of Japan, experienced a correction, mainly driven by soft economic data from China, which saw the Chinese Shanghai Composite Index decreased by -6.8% for the month. Japan (TOPIX) returned +3.3% for the month while negative returns were seen in Hong Kong and India, with the Hang Seng returning -4.9% and the BSE-500 down 1.4% for the month, all in local currency terms.

Property

Domestic REITs as measured by the benchmark S&P/ASX 300 A-REIT Index finished the month down -0.6%. GREITs continued to produce positive returns. The FTSE EPRA/NAREIT Global Developed Index returned 2.3% on a fully hedged basis. Unlisted property funds (as measured by the Mercer/IPD Pooled Property Fund Index) increased by 1.1% over the month.

 

Fixed Interest

Domestic bond markets posted positive returns with the UBS Australia Composite Bond Index returning 0.8%. Global bond returns were also positive. The Citigroup World Government Bond (ex-Australia) Index gained 3.2% during the month and similarly, the Barclays Capital Global Aggregate Bond Index appreciated 3.5%, both on a fully hedged basis.

 

Currency

The Australian dollar depreciated against all major currencies. Notably, the A$ performed the worst against the US dollar and the Pound Sterling, returning -4.1% against both currencies. The dollar returned -2.9% against the Euro and -1.8% versus the Yen. On a trade weighted basis, the local currency depreciated 2.9%.

This information has been prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 for general information only. The information does not take into account your personal objectives, financial situation or needs. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult a licensed or appropriately authorised financial adviser before making any financial decision.