BT Monthly Markets Chart Pack – January 2008

An overview of movements in global financial markets

2

Global share markets weaker in January

It wasn’t the best start to the year for global share markets, with most closing January very much in the red amid continued fallout from the US sub-prime mortgage crisis and increasing fears of a recession in the US. Share markets in the US, Europe and Asia fell as much as 25% from the record highs posted just a few months ago as investors began to turn bearish, though they were able to pull back some of the losses late in the month.

The Australian share market was not immune to the volatility we saw in January, with the S&P/ASX 300 Accumulation Index closing the month 11.3% lower amid fears that a recession in the US will impact on global growth.

3

Source: BT Financial Group, Datastream. Global shares measured by the MSCI World (Price) Index to 31 January 2008

Despite recent market volatility, history shows that share markets usually bounce back over time

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Bond Market Crash

Aug 97

Asian Currency Crisis

Jul 98

Russian Bond Crisis

Jul 01

Tech Wreck

Sep 01

Attack on Twin Towers

Jun 07

US Sub-prime Crisis

Jan 91

Gulf War

Impact of major market events on global shares since 1990

4

Source: BT Financial Group, Datastream

S&P/ASX 300 Accumulation Index – year to 31 January 2008

The Australian share market started 2008 in the red

34,000

35,000

36,000

37,000

38,000

39,000

40,000

41,000

42,000

43,000

31/01/07 31/03/07 31/05/07 31/07/07 30/09/07 30/11/07 31/01/08

5

Key Australian economic news – January

The Reserve Bank of Australia (RBA) raised interest rates a further 0.25% at its early February meeting, taking the official cash rate to 7.00%. The Bank’s decision came on the heels of the latest CPI data which revealed increasing inflationary pressures. Interest rates are now at their highest level since November 1996.

Retail sales grew at a solid rate in December, rising by 0.5% after a 0.8% increase the month before. The rise was broadly in line with expectations.

The unemployment rate ticked down to 4.3% in December, confirming that the labour market ended 2007 on a strong note.

After showing remarkable strength through the second half of 2007, when the housing market staged a solid upswing despite rate hikes in August and November, building approvals showed a sharp reversal in December with activity falling an abrupt 16%.

Source: BT Financial Group

6

The Australian dollar stronger against the greenback and the Euro in January

The Australian dollar (A$) has traded within the same US$0.86 to US$0.90 cent range now for the past couple of months as concerns over global growth continue to be offset by a strong local economy and a widening differential between US and Australian interest rates.

At the end of January:

A$1 bought US$0.8956 +2.3%

€0.6027 +0.5%

¥95.34 -2.5%

Source: BT Financial Group

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Currency markets – A$ per US dollar

Source: BT Financial Group. Figures at 31 January 2008.

0.5000

0.5500

0.6000

0.6500

0.7000

0.7500

0.8000

0.8500

0.9000

0.9500

1.0000

Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08

The Australian dollar versus the US dollar…

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Currency markets – A$ per Euro

Source: BT Financial Group. Figures at 31 January 2008.

the Euro…

0.5300

0.5450

0.5600

0.5750

0.5900

0.6050

0.6200

0.6350

0.6500

Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08

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and the Yen

70

75

80

85

90

95

100

105

110

Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08

Currency markets – A$ per Yen

Source: BT Financial Group. Figures at 31 January 2008.

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Official world interest rate movements – January

The US Federal Reserve raised interest rates twice in January, while the Bank of England, the European Central Bank and the Bank of Japan decided to leave rates on hold. The RBA moved rates higher at its early February meeting.

Current rate Last movedDirection of last move

Australia 7.00% Jan 2008

US 3.00% Jan 2008

Europe (ECB) 4.00% Jun 2007

Japan 0.50% Feb 2007

United Kingdom 5.50% Dec 2007

Source: BT Financial Group

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World growth is expected to be 3.2% this year, and follows an estimated 3.7% in 2007

Source: Consensus Economics

2008 world growth estimates

Month of estimate

Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08

Australia 3.5% 3.5% 3.6% 3.6% 3.7% 3.7% 3.6% 3.6%

US 2.9% 2.8% 2.6% 2.4% 2.4% 2.3% 2.1% 2.0%

Japan 2.2% 2.2% 2.1% 2.1% 1.9% 1.8% 1.5% 1.5%

China 9.8% 9.9% 10.6% 10.6% 10.7% 10.5% 10.5% 10.4%

Germany 2.3% 2.4% 2.4% 2.3% 2.2% 2.1% 1.9% 1.8%

UK 2.3% 2.2% 2.2% 2.1% 2.0% 1.9% 1.9% 1.8%

World 3.4% 3.4% 3.4% 3.5% 3.4% 3.4% 3.2% 3.2%

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Source: BT Financial Group

31 January 2008

Global share market returns

1 year 3 years (pa) 5 years (pa)

Global

S&P 500 Index (US) -4.15% 5.28% 10.01%

Nasdaq (US Tech.) -3.01% 5.03% 12.59%

Nikkei 225 (Japan) -21.81% 6.08% 10.26%

Hang Seng (Hong Kong) 16.66% 19.57% 20.43%

DAX (Germany) 0.92% 17.21% 20.12%

CAC (France) -13.17% 7.56% 10.64%

FTSE 100 (UK) -5.21% 6.61% 10.51%

Australia

S&P/ASX 300 Accum. Ind. 1.53% 15.85% 18.72%

S&P/ASX Small Ordinaries -1.60% 15.45% 21.56%

S&P/ASX 300 Listed Prop. -23.30% 5.61% 11.19%

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Short-term asset class performance

Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$

1-year rolling returns to 31 January 2008 (%) Best performing asset class for the year

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993

Australian cash

6.78 6.09 5.77 5.62 4.95 4.82 5.05 6.32 5.09 5.13 5.54 7.45 7.96 5.66 5.30 6.74

Australian bonds

4.24 3.45 5.91 7.23 2.44 9.20 3.94 14.02 -1.89 8.86 12.72 11.29 20.10 -6.19 16.06 15.19

Australian property

-23.30 38.86 10.62 32.67 8.75 13.86 15.18 20.12 -6.51 12.91 27.10 10.63 20.93 -10.48 32.61 7.92

Australian shares 1.53 22.50 25.02 30.79 15.95 -11.28 7.28 11.94 15.72 10.84 13.45 10.86 29.98 -17.58 52.18 -3.00

International bonds

1.25 0.92 -1.99 6.57 -12.45 6.68 5.46 20.40 -6.85 23.43 15.65 -0.23 17.07 -2.64 7.08 20.93

International shares

-14.01 13.41 19.71 7.96 7.33 -31.04 -14.50 8.97 13.65 35.12 31.07 10.29 26.91 -8.68 23.84 7.37

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Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$

1-year returns to 31 January 2008 (%)

Short-term asset class performance (cont’d)

-14.0

1.3

1.5

-23.3

4.2

13.4

0.9

22.5

38.9

3.5

31 January 2007

31 January 2008

Australian bonds

Listed property

Australian shares

Global bonds

Global shares

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Long-term asset class performance

Note: Accumulated returns based on $1,000 invested in December 1984Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in A$

31 January 2008

Australian bonds

Listed property

Australian shares

Cash

Global shares

$0

$1,500

$3,000

$4,500

$6,000

$7,500

$9,000

$10,500

$12,000

$13,500

$15,000

$16,500

$18,000

$19,500

$21,000

$22,500

$24,000

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

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Source: BT Financial Group. West Texas Intermediate oil price at 31 January 2008.

Oil prices – US$ per barrel

After hitting the US$100 mark for the first time ever, oil closed the month 4.3% lower at US$91.75 a barrel

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

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Summary

We expect global growth this year to be positive, though the threat of a recession in the US has obviously increased recently and this will pose a significant risk to future growth.

The underlying strength of the Australian economy looks set to continue, though any significant deterioration in global growth will obviously have an adverse effect locally.

In raising interest rates in February, the RBA appears to have retained its tightening bias. But whether the RBA pulls the trigger on another rate hike in 2008 will depend largely on the Bank’s ability to bring inflationary pressures under control.

The Australian dollar looks set to remain range bound in the near-term, though the threat of a slowdown in global growth will mean a rougher ride.

Gains in global share markets, including here in Australia, are likely to slow in the first half of 2008.

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This presentation has been prepared by BT Financial Group Limited (ABN 63 002 916 458) ‘BT’ and is for general 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 objectives, financial situation or needs.  It does not contain and is not to be taken as containing any securities advice or securities recommendation.  Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice.  BT does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation.  Except insofar as liability under any statute cannot be excluded, BT and its directors, employees and consultants do not accept any liability for any error or omission in this presentation or for any resulting loss or damage suffered by the recipient or any other person.  Unless otherwise noted, BT is the source of all charts; and all performance figures are calculated using exit to exit prices and assume reinvestment of income, take into account all fees and charges 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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