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to the August edition of Hill Rogers Spencer Steer Financial Services Monthly Update. |
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Please contact Richard McGrath on 9232 5111 should you wish to discuss any points covered. |
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Monthly Update
August 2011 |
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Market Moves - as at 31 August 2011 |
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Returns (%) p.a |
1 mth |
3 mth |
6 mth |
1 yr |
3 yr |
5 yr |
10 yr |
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Australian Equities |
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S&P/ASX 300 Accumulation Index |
-1.98
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-7.60
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-9.14
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2.07
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-1.42
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0.84
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7.23
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S&P/ASX Small Ordinaries Accumulation Index |
-2.69
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-6.34
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-10.75
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7.24
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-1.81
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0.29
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8.35
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Global Equities
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MSCI World Acc Index with Gross Div (A$)
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-4.62
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-10.53
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-13.39
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-4.38
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-7.67
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-6.22
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-2.93
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S&P 500 Composite Accumulation Index (A$) |
-3.00
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-9.36
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-11.79
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-1.52
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-6.51
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-5.81
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-4.35
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FTSE 100 Accumulation Index (A$) |
-5.00
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-10.41
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-12.47
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-6.03
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-8.39
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-7.69
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-2.32
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MSCI Emerging Markets Free W/Gross Div ($A) |
-6.56
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-11.05
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-9.57
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-9.08
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-2.03
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1.61
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8.31
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REITS (Listed Property Securities) |
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S&P/ASX 300 A-REIT Accumulation Index |
2.89
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-4.48
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-6.07
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-2.63
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-12.10
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-12.12
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1.25
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UBS Global Real Estate Inventor Index (A$)
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-4.79
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-6.91
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-1.60
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17.28
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-0.50
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-2.14
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n/a
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Fixed Interest |
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UBS Warburg Composite Bond Index
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1.99
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4.27
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6.84
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7.10
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7.95
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7.03
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6.24
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UBS Warburg bank Bill Index
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0.43
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1.25
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2.51
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5.00
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4.61
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5.58
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5.44
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BarCap Global Aggregate Index Hedged $A
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1.68
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3.43
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6.52
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6.89
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9.63
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8.47
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8.01
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Data Source: IRESS, Perpetual Funds Management, Morningstar, Lonsec, Returns greater than one year are annualised
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Economic indicators released in August were mixed. Australia’s jobless rate as at July has increased to 5.1% as the economy lost 22,200 full time jobs, a result which was much weaker than generally expected. The ANZ Job Advertisements Series fell 0.7% in July, to be 8.3% higher than 12 months ago.
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Retail sales rose 0.5% in July, seasonally adjusted, following a fall of 0.1% in June and 0.6% in May 2011. Other retailing (0.7%), food retailing (0.2%), and household goods retailing (0.2%) improved, whilst clothing, footwear and personal accessory retailing (-0.7%) and department stores (-0.5%) fell.
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Building Approval figures, seasonally adjusted, rose 1% in July, after a fall of 3.6% in June 2011. Private sector houses approved fell 0.2% and other private dwellings, which include apartments, fell 1.2%, seasonally adjusted.
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The TD-Securities Melbourne-Institute Monthly Inflation Gauge fell 0.1% in August, the first fall in the index in almost two years. Fruit and vegetables were cheaper, along with holiday accommodation and electronic equipment; however prices rose for private motoring, furniture, and household services.
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On 6 September, the RBA Board decided to leave the cash rate unchanged at 4.75%. The RBA statement observed that the global economy has been unsettled due to sovereign debt problems and weak economic growth in Europe and the US. Commodity prices have remained strong and Australian terms of trade is at a very high level. Resources sector investment is stronger, although cautious behaviour by households and the high exchange rate are having a noticeable dampening effect in some sectors. Growth in employment has moderated and inflation is expected to decline. While inflation has, to date, remained consistently within the RBA’s target range, the Board remains concerned about the medium-term outlook for inflation. The Board believes that the current mildly restrictive stance of monetary policy remains appropriate, particularly in view of the acute sense of uncertainty in global financial markets over recent weeks; however the Board will continue to assess the evolving outlook for growth and inflation.
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Economic indicators released in the US in August were mixed. Inflation in the US strengthened 0.5% in July after falling 0.2% in June, with increases in energy and food prices contributing. The annual inflation rate remained steady at a year-on-year at rate of 3.6%, for the third month in a row. Core inflation, excluding food and fuel, rose 0.2% after increasing 0.3% in June. For the 12 months to July, core inflation was 1.8%, the largest gain since December 2009.
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The US Labor Department reported that the unemployment rate was 9.1% in August, with no new jobs added during the month. This report was the weakest since September 2010, with businesses holding off hiring after recent falls in business and consumer confidence.
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The Conference Board's Consumer Confidence Index fell almost 15 points to 44.5 in August, the lowest level since April 2009. Worries about the economy and sharp volatility in the stock market were key drivers behind the result, as were high levels of unemployment, weak home values and rising grocery costs.
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The Australian dollar (AUD) depreciated 2.40% against the US dollar in August and finished the month at US$1.0691. The AUD was lower against other currencies, falling 3.33% against the Euro, 2.30% against the British pound sterling, and 3.62% against the Japanese Yen.
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The Australian share market fell again in August, with the S&P/ASX 300 Accumulation Index losing 1.98%. The S&P/ASX Small Ordinaries Accumulation Index also fell in August, by 2.69%, underperforming the large cap market. The small cap market continued to outperform the large cap market over the 12 months to August, registering 7.24% compared to 2.07% for the large caps.
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Global equities were weaker in August, with the ongoing weaknesses of global markets and economies adversely affecting returns. The MSCI World Accumulation Index fell 4.62% in AUD terms and the S&P 500 Composite Accumulation Index (A$) and the FTSE100 Accumulation Index (A$) declined 3% and 5% respectively in AUD terms.
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Emerging Markets also fell sharply in August, with the MSCI Emerging Markets Free W/Gross Div (A$) falling 6.56%. The Index has lost 9.08% over the past 12 months, underperforming developed equity markets, represented by the MSCI World Accumulation Index.
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Asian markets were weaker in August. In Japan, the Nikkei lost 8.93% for the month, while in Hong Kong the Hang Seng fell 8.49%. The Shanghai Composite was weaker for the month, falling 4.97% in local currency terms. In Europe, major markets fell sharply on the back of ongoing macroeconomic weakness. The German DAX index fell 19.19% while the French CAC40 lost 11.33% in local currency terms.
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The S&P/ASX 300 A-REIT Accumulation Index rose 2.89%, outperforming the broader domestic equity market for the month. Overall, the S&P/ASX 300 A-REIT Accumulation Index lost 2.63% in the 12 months to August, outperforming the broader market.
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The UBS Global Real Estate Investors Index (Total Returns) Hedged (A$) fell 4.79% in August, underperforming the domestic index. Over the 12 months to August the Index performed strongly, gaining 17.28%.
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The Australian bond market was stronger in August, as macroeconomic concerns offset softer local economic data. The UBS Warburg Composite Bond Index rose 1.99% in August, while the UBS Warburg Bank Bill Index rose 0.43%. Over the 12 months to August, these indices returned 7.10% and 5% respectively.
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T. +61 2 9232 5111
F. +61 2 9233 7950 |
Level 5, 1 Chifley Square
Sydney NSW 2000 Australia |
GPO Box 7066
Sydney NSW 2001 |
www.hr-ss.com.au
broker@hr-ss.com.au |
Hill Rogers Financial
Services Pty Limited |
ABN 40 101 865 598
AFSL 289 009 |
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Member of KS International, an association of global independent accounting firms |
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