Investment update for October 2012
Mixed month for markets
October was a mixed month for markets. While economic data continues to support the idea the US housing market has turned for the better, only 40% of reporting companies reported positive results. The European Central Bank’s (ECB) bond buying operation has, for the time being, prevented the crisis from re-escalating. China benefited from renewed optimism on the back of re-acceleration of the money supply, improved trade data and improved Purchasing Manufacturing Index (PMI) data. The majority of commodity markets finished the month on a negative note; the notable exception was natural gas, which posted +11.2% over the month.
The MSCI World ex-Australia Index (hedged in $A) was marginally down (-0.3%) over the month. Unhedged returns (in $A) were slightly lower (-0.5%) due to the $A appreciating against the yen. US markets disappointed over the month on the back of weak earnings, notably from the technology sector. Europe was generally positive, led by Austria, Greece, Netherlands, Portugal, Spain and France while Germany and the UK just managed to reach positive territory. Emerging markets (unhedged in $A) performed on par with developed markets (unhedged in $A) with China and South Africa performing well while Brazil, India and Korea lagged.
The S&P/ASX300 Index continued its recent good run to finish the month in positive territory for the fifth consecutive month. Domestic equities overall were driven by the Industrials Index (3.2%). Midcaps were the standout performing segment of the market (3.9%), driven by Midcap Resources. From a sector perspective, all sectors recorded gains over the month with Industrials, Financials and Telecoms leading the way, with the latter being the standout performer on the back of market support for Telstra. Notable sector laggards were Energy, IT and Utilities.
For the time being, markets have responded positively to additional stimulus measures. However, Chinese economic data continues to disappoint. In addition, the US ‘fiscal cliff’, further challenges for Europe and generally lower global growth expectations make for a cautious outlook.
Broad stock market performance – October 2012
|Performance (income and capital gain or loss) %|
|Australian Shares (S&P/ASX 300 Accumulation)||2.9|
|International Shares (MSCI AC World ex-Aust) hedged||-0.5|
|Global Bonds (Barclays Global Aggregate (Hedged))||0.6|
|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
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