Transcript Slide 1

BT Monthly Markets
Chart Pack – August
2007
An overview of movements in global financial markets
Market volatility continued in August
 Market volatility was again the central theme
throughout the month of August as the crisis in US
credit markets continued to gather momentum. Global
share markets experienced a number of large daily
swings which saw some markets, including the US, fall
as much as 12% from their July peaks.
 And it was the same story here in Australia, with the
local market undergoing several big sell-offs, the
likes of which we hadn’t seen since September 11, 2001.
However, the local market was able to regroup and did
end the month in positive territory, with the S&P/ASX
300 Accumulation Index up 2.22%.
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Global shares ended August flat amid ongoing
concerns over the crisis in US credit markets
MSCI World (Price) Index – January to August 2007
1230
1210
1190
1170
1150
1130
1110
1090
1070
1050
31/12/2006 31/01/2007 28/02/2007 31/03/2007 30/04/2007 31/05/2007 30/06/2007 31/07/2007 31/08/2007
Source: BT Financial Group, MSCI
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Key Australian economic news – August
 The Reserve Bank of Australia (RBA) left interest rates on hold at 6.50% following its
early September meeting. The RBA raised interest rates 0.25% in August after strong
domestic data continued to put upwards pressure on inflation.
 After a very strong start to the year, GDP growth exceeded expectations again in the
June quarter, rising 0.9% to be 4.3% higher than a year ago - the fastest annual growth
since mid-2004
 After two straight months of declines, retail sales rebounded strongly in July, rising 0.9%
 The unemployment rate remained steady at 4.3% in July
 The local June half profit reporting season was a good one with nearly 50% of
companies posting better-than-expected results
Source: BT Financial Group
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The Australian dollar was weaker in August
 The Australian dollar (A$) dropped as low as US$0.7860 during the month.
 The fall was caused mainly by a partial unwinding of the ‘carry trade’, whereby
speculators borrow in low-yielding currencies, e.g. the Yen, and invest in high-yielding
currencies, e.g. the A$ and the Kiwi dollar.
 At the end of August:
A$1 bought
Source: BT Financial Group
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US$0.8179
-4.8%
€0.6001
-4.3%
¥94.75
-7.5%
The Australian dollar fell against the US dollar
Currency markets – A$ per US dollar
0.9000
0.8500
0.8000
0.7500
0.7000
0.6500
0.6000
0.5500
0.5000
Aug-02
Feb-03
Aug-03
Feb-04
Aug-04
Source: BT Financial Group. Figures as at 31 August 2007.
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Feb-05
Aug-05
Feb-06
Aug-06
Feb-07
Aug-07
…the Euro…
Currency markets – A$ per Euro
0.6500
0.6400
0.6300
0.6200
0.6100
0.6000
0.5900
0.5800
0.5700
0.5600
0.5500
0.5400
0.5300
Aug-02
Feb-03
Aug-03
Feb-04
Aug-04
Source: BT Financial Group. Figures as at 31 August 2007.
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Feb-05
Aug-05
Feb-06
Aug-06
Feb-07
Aug-07
…and the Yen
Currency markets – A$ per Yen
110.0000
105.0000
100.0000
95.0000
90.0000
85.0000
80.0000
75.0000
70.0000
65.0000
60.0000
Aug-02
Feb-03 Aug-03
Feb-04
Aug-04
Source: BT Financial Group. Figures as at 31 August 2007.
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Feb-05
Aug-05
Feb-06
Aug-06 Feb-07
Aug-07
Official world interest rate movements – August
 The RBA left interest rates on hold at 6.50% following its early September meeting.
The decision came after the Bank raised interest rates 0.25% in August.
 Benchmark rates in the US, Europe, Japan and the UK remained on hold.
Direction of
Current rate
Last moved
last move
Australia
6.50%
August 2007
US
5.25%
June 2006
Europe (ECB)
4.00%
June 2007
Japan
0.50%
February 2007
United Kingdom
5.75%
July 2007
Source: BT Financial Group
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World growth is expected to be 3.4% in 2007,
following an estimated 3.9% in 2006
2007 world growth estimates
Month of estimate
Jan 07
Feb 07
Mar 07
Apr 07
May 07
Jun 07
Jul 07
Aug 07
Australia
2.9%
2.9%
3.0%
3.1%
3.3%
3.8%
3.9%
3.8%
US
2.4%
2.7%
2.4%
2.3%
2.1%
2.1%
2.1%
1.9%
Japan
1.8%
1.9%
2.1%
2.2%
2.2%
2.3%
2.5%
2.4%
China
9.6%
9.7%
9.7%
10.0%
10.3%
10.4%
10.5%
11.3%
Germany
1.5%
1.7%
2.0%
2.1%
2.4%
2.7%
2.7%
2.7%
UK
2.5%
2.6%
2.6%
2.6%
2.7%
2.7%
2.8%
2.8%
World
3.2%
3.3%
3.3%
3.3%
3.3%
3.4%
3.4%
3.4%
Source: Consensus Economics
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Global share market returns
31 August 2007
1 year
3 years (pa)
5 years (pa)
S&P 500 (US)
13.05%
10.11%
9.98%
Nasdaq (US Tech.)
18.89%
12.20%
14.58%
2.65%
14.35%
11.49%
Hang Seng (Hong Kong)
37.90%
23.12%
19.02%
DAX (Germany)
30.35%
26.37%
15.52%
CAC (France)
9.64%
16.36%
10.96%
FTSE 100 (UK)
6.73%
12.23%
8.32%
S&P/ASX 300 Accum. Ind.
27.34%
25.86%
19.95%
S&P/ASX Small Ordinaries
33.03%
27.12%
23.52%
S&P/ASX 300 Listed Prop.
21.93%
20.25%
19.10%
Global
Nikkei (Japan)
Australia
Source: BT Financial Group
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Asset class performance
1-year to 31 August 2007
$1,350
$1,300
Australian shares
$1,250
Listed property
$1,200
$1,150
$1,100
Global shares
$1,050
Australian bonds
$1,000
Global bonds
$950
$900
Aug- Sep06
06
Oct- Nov- Dec- Jan06
06
06
07
Feb- Mar- Apr- May- Jun07
07
07
07
07
Jul07
Aug07
Note: Accumulated returns based on $1,000 invested in August 2006
Source: S&P/ASX 300 Acc Index, MSCI World ex Aust (net divs) Index in A$, S&P/ASX 300 Property Index, UBS
Composite 0+ years index, Citigroup World Government Bond, Unhedged in AUD
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Asset class performance (cont’d)
1-year rolling returns to 31 August 2007 (%)
2007
2006
2005
2004
2003
2002
2001
2000
Best performing
asset class for the
year
1999
1998
1997
1996
1995
1994
1993
1992
Australian
cash
6.48
5.81
5.67
5.44
4.90
4.65
5.91
5.78
5.01
5.05
6.36
7.78
7.50
4.96
5.77
8.22
Australian
bonds
4.39
3.27
7.19
5.16
6.58
5.17
10.44
5.82
4.65
7.01
14.28
12.57
11.66
-2.23
17.99
18.03
Australian
property
21.93
20.94
17.91
24.29
10.88
9.94
16.25
9.38
10.86
14.18
18.82
10.74
9.11
-5.97
31.11
17.93
Australian
shares
27.34
20.33
30.11
16.09
7.29
-1.20
2.85
19.16
22.80
-0.44
19.31
9.62
5.46
9.02
31.42
3.36
International
bonds
-0.70
-1.08
0.13
2.19
-6.85
5.10
16.09
7.84
-6.42
38.87
8.46
0.95
12.96
-7.36
15.46
33.89
International
shares
9.39
13.73
10.61
5.81
-5.79
-21.21
-18.28
24.88
19.52
33.60
32.07
7.17
6.86
-2.01
28.72
12.96
Source: S&P/ASX 300 Acc Index, MSCI World ex Aust (net divs) Index in A$, S&P/ASX 300 Property Index, UBS
Composite 0+ years index, Citigroup World Government Bond, Unhedged in AUD
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Asset class performance (cont’d)
1-year returns to 31 August 2007 (%)
31 August 2006
31 August 2007
3.3
4.4
Australian bonds
20.9
21.9
Listed property
20.3
Australian shares
Global bonds
Global shares
27.3
-1.1
-0.7
13.7
9.4
Source: S&P/ASX 300 Acc Index, MSCI World ex Aust (net divs) Index in A$, S&P/ASX 300 Property Index, UBS
Composite 0+ years index, Citigroup World Government Bond, Unhedged in AUD
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Long-term asset class performance
31 August 2007
$24,000
Cash
$22,500
Australian Bonds
$21,000
Australian shares
Listed Property
$19,500
Australian Shares
$18,000
Listed property
International Shares
$16,500
$15,000
$13,500
Global shares
$12,000
$10,500
Australian bonds
$9,000
$7,500
Cash
$6,000
$4,500
$3,000
$1,500
$0
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
Note: Accumulated returns based on $1,000 invested in August 2006
Source: S&P/ASX 300 Acc Index, MSCI World ex Aust (net divs) Index in A$, S&P/ASX 300 Property Index, UBS
Composite 0+ years index, Citigroup World Government Bond, Unhedged in AUD
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Crude oil prices fell in August on concerns that a
slowdown in the US economy would affect demand
Oil prices – US$ per barrel
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0
87
88
89
90
91
92
93
94
95
96
97
98
99
Source: BT Financial Group. West Texas Intermediate as at 31 August 2007.
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01
02
03
04
05
06
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information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete
description of the matters described. The presentation has been prepared without taking into account any personal
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but exclude the entry fee. It is important to note that past performance is not a reliable indicator of future performance.
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