Market Update – November 2013

Market Commentary

The timing of the tapering of the US Federal Reserve’s Quantitative Easing (QE) program and the likely impact on growth and capital flows was at the front of investor minds in November. Influencing market pricing over the month was Fed Chair nominee Janet Yellen being confirmed by the United States Senate and stronger than expected economic data releases. In Europe the European Central Bank (ECB) cut interest rates as inflation came in below expectations and well below the ECB’s target. Conditions in the Eurozone continue to remain depressed and many indicators point toward the need for further easing of monetary conditions in all countries except Germany. Economic data released in China pointed toward a stabilisation of conditions and announcements made following the Third Plenary Session were well received by the market.

The investment returns of the major markets for one and three months to 30 November 2013 are summarised below.




 

Market Performance – November 2013

Performance
%

Month

3 months

Australian Shares (S&P/ASX 300 Accumulation)

-1.4

4.7

International Shares (MSCI World ex-Australia) unhedged

5.7

8.4

International Shares (MSCI World ex-Australia) hedged

2.6

11.0

Unlisted Property (Mercer Unlisted Property Funds Index (Pre Tax)

0.5

2.0

Listed Property Trusts (S&P/ASX 300 Property Trusts Accumulation)

-2.7

0.8

Australian Bonds (UBS Composite Index)

-0.1

0.4

Global Bonds (Barclays Global Aggregate (Hedged))

0.1

2.2

Cash (UBS Bank Bills)

0.2

0.6

Appreciation of $A against $US

-3.5

2.6

*Estimate as at 10/12/2013

The strong monthly return of 2.6% from international shares ($A hedged) was boosted to 5.7% for the unhedged exposures due to the weakness in the $A. Across developed markets the strongest performing country in local currency terms was Japan, .the weakest return came from New Zealand. Emerging markets (unhedged in $A) performed strongly returning 2.1%.

The S&P/ASX300 Accumulation Index (Australian shares) was down by 1.4% for the month due to the weak performance of the Energy and Industrials sectors. Financials (ex-Property Trusts) was the only sector to produce a positive absolute return. Small cap stocks underperformed large caps for the third consecutive month.

Investment returns from bonds (Australian and global) were relatively flat over the month.