Investment update for November 2012
A cautious month for markets
Initially focused on the appointment of the world’s two most powerful political positions, investors’ attention quickly turned to the impending ‘fiscal cliff’ in the world’s largest economy. These concerns continued throughout the month, but US economic data were reasonably positive, particularly housing and consumer spending. The smooth appointment of Xi Jinping as General Secretary was followed by a positive Chinese manufacturing report, leading to optimism that China will avoid a ‘hard landing’. Greece and its debt struggles were once again centre stage in Europe, but these were relieved by several measures announced by Euro-zone finance ministers and drove more positive sentiment in Europe by the end of the month.
The MSCI World ex-Australia Index (hedged in $A) was up (1.8%) over the month, although unhedged returns (in $A) were lower (0.7%) due to the $A appreciating against all major currencies. Developed market equity indices were generally positive with Greece (6.6%), Japan (5.6%) and Austria (5.1%) leading the way, while Portugal (-2.8%) and Ireland (-2.4%) were the worst of the few negative performers. The US equity indices were mixed, ending the month relatively flat after some volatility. Emerging markets (unhedged in $A) (0.7%) performed broadly in line with developed markets on an unhedged in $A basis, although with a greater mix of positive and negative returns in underlying country indices. Taiwan, India and Argentina were strong performers, while Egypt, Czech Republic and Hungary were amongst those most in the red.
The S&P/ASX300 Accumulation Index (total return) managed a positive return in November (0.4%), although the S&P/ASX 300 Price Index finished slightly negative (-0.3%). Mid Caps were again the best performer (1.4%), with Small Caps proving to be a significant detractor (-2.4%) as mining services stocks remained out of favour. The key positive sector drivers for domestic equities over the month were Health Care (6.1%), Telecommunications (3.8%) and Consumer Discretionary (3.4%), as CSL and TLS continued their strong runs and media stocks led the way for Consumer Discretionary. Although the majority of sectors were positive, Energy (-2.7%), LPTs (-1.3%), Industrials (-1.1%) and Materials (-0.7%) were all negative.
At the end of November, the US President is unchanged, the Chinese leadership transition is proceeding according to plan and Europe continues to avert further problems. Recent US and Chinese economic data has even provided a hint of pre Christmas optimism. However, as ever, risks remain, including continued debt related political brinksmanship in the US and Europe, potential military activity in the Middle East and the increasing territorial tensions in Asia.
Broad stock market performance – November 2012
|Performance (income and capital gain or loss) %|
|Australian Shares (S&P/ASX 300 Accumulation)||0.9|
|International Shares (MSCI AC World ex-Aust) hedged||0.7|
|Global Bonds (Barclays Global Aggregate (Hedged))||0.7|
|Cash (UBS Bank Bills)||0.3|
|Appreciation of $A against $US||-0.3|
|Check out AvSuper’s weekly returns and quarterly performance results Please note that past performance is not always a reliable indicator of future performance.|
Source – JANA, FactSet, S&P, MSCI, Mercer, UBS, Barclays *Estimated Performance at date of release
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