News Wheel - The Directors’ Cut

• General News
• 17th October 2013

Welcome to the October 2013 edition of News Wheel The Directors’ Cut.

Industry Super Australia (the new name for Industry Super Network) will be launching a new TV advertising campaign ‘A Show of Strength’ on Sunday, 20 October 2013.

With the Coalition Government now in place, some of the key changes for super as outlined in the Coalition’s policy for Superannuation are:

• a two year delay for further Super Guarantee increases
• revisit contribution cap limits and the co-contribution scheme (after the Budget is in surplus)
• plans to move the small business super clearing house to the ATO
• review the minimum draw down amounts for account-based pensions.

Below is JANA’s regular monthly market commentary.

Attached to this email is TWUSUPER Super News, which provides employers with an update about areas of super the new Federal Government will change or review and a quick reminder about the upcoming Stronger Super changes.

New role:
Investment Operations Officer
Jerom Lotscher has joined us to support Andrew Killen.
Jerom has a broad range of experience from Harcourt Investment Consulting in Zurich and more recently as Manager Investment Operations at Australia Post Superannuation Scheme.

Market Commentary – September 2013

Central Banks and Politicians Fight for the Driver’s Seat

Central bank policy was again the driver of global markets as investors responded to the US Federal Reserve’s decision to delay the tapering of their quantitative easing (QE) program. The prospect of prolonged stimulus, coupled with better-than-expected economic data releases from Europe and China, improved sentiment and led to strong performance by assets that benefit from improvements in the economic cycle.

Further support for growth assets came from the political front as the governments of the United States and Russia allayed market fears of a US military strike in Syria as they worked toward a diplomatic solution to the alleged use of chemical weapons in the ongoing Syrian civil war. However, this political support faded rapidly toward the end of the month as a looming US government shutdown and potential confidence vote in Italy rocked markets. While issues in Italy were eventually resolved, the same cannot be said for the US and markets will be closely watching negotiations over the government shutdown and looming debt ceiling debate in October.

The MSCI World ex-Australia Index rose 3.9% over the month in local currency terms. However, the strong appreciation of the $A against most major currencies resulted in a flat return in $A on an unhedged basis. Across the developed markets the strongest performing countries in local currency terms were Finland, Greece and Spain, which each rose by over 10% for the month. The weakest returns came from the UK, Norway and Canada.

Emerging markets (unhedged in $A) outperformed developed markets, returning 1.5% as Index heavyweights China and Brazil produced returns in excess of 5%. From a sector perspective, Industrials and Consumer Discretionary stocks produced strong returns while Energy, Consumer Staples and Health Care detracted from performance.

The S&P/ASX300 Accumulation Index (+2.2%) underperformed hedged global equities as improved business and consumer confidence has not yet brought about stronger economic activity. Industrials, Information Technology and Consumer Discretionary were the strongest performing sectors over the month, while Health Care was the only sector to record a negative absolute return. Within the small cap universe there was a large divergence between the Industrials and Resources sectors, with the former outperforming the latter by 10%. Mid caps was the standout segment of the Australian market, while top 20 stocks lagged.

The S&P/ASX 300 Property Trusts Index produced a positive absolute return but lagged the broader Australian market. Despite domestic data releases pointing toward improving confidence, retail sales growth, private sector credit growth and business conditions remain subdued and are moderating the performance of the industrial, office and retail property sectors.

Most developed market 10-year Government bond yields moved lower as investors responded to the delay in the wind back of QE. In currency markets, the $US weakened against most major currencies. The balance of payments crisis playing out in certain emerging markets has moderated recently as governments and central banks in affected nations have taken steps to contain outflows of capital, and this has provided support to the currencies of these economies.

Source: JANA Investment Advisers

Further information

For more information on this newsletter, or if you require the article in an alternative format for your use – please contact Debora on (03) 9635 5964.