Greece is the word! Global equity markets were volatile over the month mainly due to tensions created by the potential Greek exit from the Eurozone as the 30th June 2015 repayment deadline to the International Monetary Fund (IMF) loomed. Intense negotiations between Greece and its European counterparts were brought to a standstill in late June as the Greek PM Alexis Tsipras maneuvered to offer the Greek people a referendum vote on the austerity measures being imposed on Greece.
European markets sold off considerably in June, with the MSCI All Countries Europe Index (Unhedged in AUD) falling by 3.4%. US markets were also impacted by the global volatility and the S&P500 ended the month 2.1% lower despite the sustained recovery in the US local economy with a series of positive economic results.
Japanese equities were similarly impacted by the events in Europe with the Nikkei 225 losing 1.6% over the month. The Bank of Japan also announced that it would engage in further and more extended easing, which briefly pushed Japanese equities into positive territory before global events outweighed the gains.
China’s equity markets deteriorated dramatically over the month despite government intervention to buoy the tumbling markets. The Hang Seng declined 4.3% and the Shanghai-Shenzen Composite dropped 7.5%.
The investment returns of the major markets for one month, one quarter, and financial year (one year) to 30 June 2015 are summarised below.
Source – JANA, FactSet, S&P, MSCI, Mercer, UBS, Barclays
*Estimate at 6/7/2015
The MSCI World ex-Australia Index (hedged into AUD) retracted by 2.7% over the month. The Australian Dollar marginally appreciated against a basket of developed currencies over June, which resulted in a return of -2.6% (in AUD) on an unhedged basis. Across developed markets, the only market in positive territory (in local currency terms) was Ireland (0.1%), while Switzerland (-6.5%) and the UK ( 6.4%) were the weakest performing countries. Emerging markets unhedged in AUD returned -2.9%, with poor returns driven primarily by Asian and South American markets.
The Australian share market as measured by the S&P/ASX300 Index fell 5.3% over the month. Small Caps stocks retracted by 7.8% and significantly underperformed Large Caps stocks (-4.7%). Telecom stocks (-1.3%) fell the least, while Consumer Discretionary (-10.9%) and Materials (-8.3%) were the worst performing sectors. Australian listed property suffered a negative 4% return for the month.
Australian and global bonds also posted negative returns over the month and quarter. Unlisted Property and Cash were the only major sectors that contributed positively to investment returns over the month.