• Home
• About Us
  • Our Services
  • Our People
• Millennium Master Trust
  • About The Fund
  • Insurance Cover
  • Investment Options
  • FAQ
  • Forms
• Southern Cross Super Plan
  • About The Fund
  • Insurance Cover
  • Investment Options
  • FAQ
  • Forms
• Taxi Industry Super Plan
  • About The Fund
  • Insurance Cover
  • Investment Options
  • FAQ
  • Forms
• News
• Forms
  • Millennium Master Trust Forms
  • Southern Cross Super Plan Forms
  • Taxi Industry Super Fund Forms
• Links
• Login
• Contact

 Quick Links

News

Market Volatility Still a Factor in Investment Returns

(Article added 12/03/2008)

There has been a significant sell down in both global and Australian markets over the last 6 months.  As you may well be aware, the market uncertainty began in mid 2007 with the US residential property mortgage markets, sometimes referred to as the “sub prime” crisis.

This market uncertainty has affected all markets; shares, property, fixed interest and cash are likely to have affected the recent returns of your investment portfolio. 

To give you an idea of the scale of the market movements, we have shown recent market movements in the short term and the long term.  For instance, the following two charts show the movement in the Australian share market in the last 3 months and then the movement in the Australian share market over the last five years.  While it has been a large sell off, over a five year period the market has done very well.

Data sourced from Yahoo Finance

This pattern of the markets correcting has been a global phenomenon.  The following charts show the same time periods; 3 months then five years, for the US (S&P500) and UK (FTSE100) markets.

In the US market chart it can be seen that, although the market has not fallen so much in the last month, it is very volatile, with strong daily movements.

Data sourced from Yahoo Finance

The next charts, showing the London exchange index, have a very similar pattern.

Data sourced from Yahoo Finance

The key themes that are occurring in the market are:

• Lack of availability of credit: In general banks have become less willing to lend money and this has caused difficulties for companies that need to borrow or refinance borrowings.  In some instances this has caused a major revaluation of those companies. An example in the Australian market is`Centro, but this tight money scenario is global in nature.
• Banks and other financial companies have themselves come under pressure as they revalue assets and declare losses.  The share prices of Australian financial companies and banks have now fallen around 30% from their highs.
• Inflation: In order to combat rising inflation in Australia, on 4th March 2008 the Reserve Bank of Australia raised official interest rates again, this time by 0.25%. 
• Oil prices: The oil price moved above the $100 a barrel mark and past the all time high on an inflation adjusted level during February.
• Currency: The Australian dollar continued to strengthen against the US dollar throughout February, rising to its highest level since 1984, near US$0.95.
• There is generally less credence being given to the ‘de-coupling’ concept that says that Asian and emerging markets will not be caught up the current global volatility.  That is, emerging markets are also expected to continue their sell down because many of these economies are export driven. 

Important Notice: The information has been prepared in good faith and is believed to be accurate – however, Millennium3 Financial Services ABN 61 094 529 987, its related bodies corporate and associated companies involved in the preparation of this bulletin provide no warranty of accuracy and exclude liability to the extent permissible at law for any errors or omissions (including those arising from negligence). The information in this bulletin is exclusively for the use of Authorised Representatives of Millennium3 Financial Services.

More Information

For more information, please contact your Superannuation adviser.

IMPORTANT NOTE:

The information provided should not form the sole basis for any action that you take. It is important to first discuss your specific circumstances with your financial Adviser.

News

Today's All Ords