bt monthly markets chart pack – may 2008 an overview of movements in global financial markets

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BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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Page 1: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

BT Monthly Markets Chart Pack – May 2008

An overview of movements in global financial markets

Page 2: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

2

Global share markets were mixed in May...

May proved to be a mixed month for global share markets, helped on the one hand by speculation that the US economy had avoided a recession but hurt on the other by rising oil prices and stagflation fears. The US and Japanese share markets managed to close the month higher, while markets in the UK and Europe finished slightly in the red.

The Australian share market posted its second monthly gain in a row in May, with the S&P/ASX 300 Accumulation Index returning 1.71%. The gains came mostly on the back of a solid rise in resources stocks, which rallied amid speculation that Chinese aluminium giant, Chinalco, had bought a significant stake in our own BHP Billiton.

Page 3: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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Global shares measured by the MSCI World ex-Australia (net dividends) Index in A$.Source: BT Financial Group, MSCI

Impact of major market events on global shares since 1986

…but continue to perform well over the long-term, despite some major market events

700

1,200

1,700

2,200

2,700

3,200

3,700

4,200

4,700

5,200

5,700

6,200

May-86 May-88 May-90 May-92 May-94 May-96 May-98 May-00 May-02 May-04 May-06 May-08

Jan 91Gulf War

Feb 94Bond Market Crash

Aug 97Asian Currency Crisis

Jul 98Russian Bond Crisis

Jul 01Tech Wreck

Sep 01Attack on Twin Towers

Jun 07US Sub-prime Crisis

Oct 87Wall Streetcrash

Nov 89Fall of the Berlin Wall Mar 03

Troops enter Iraq

Page 4: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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Source: BT Financial Group, Premium Data

S&P/ASX 300 Accumulation Index – 2008

The Australian share market closed May 1.71% higher

32,500

33,500

34,500

35,500

36,500

37,500

38,500

39,500

40,500

31/12/2007 31/01/2008 29/02/2008 31/03/2008 30/04/2008 31/05/2008

Page 5: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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Key Australian economic news – May

The Reserve Bank of Australia left interest rates on hold at 7.25% following their early June meeting. The decision had been widely expected after recent economic data hinted that the Bank’s earlier rate hikes were beginning to have the desired effect (of slowing the local economy).

Australia’s trade balance was -$2.7 billion in March, a touch better than the market (-$2.9 billion) had expected.

Retail trade fell 0.2% in April but remains 4.7% higher year-on-year. The fall came after March’s numbers were revised down from 0.5% to 0.2%.

The Australian job market remains healthy, with 25,400 jobs added in April, though the unemployment rate did edge up slightly from 4.1% last month to 4.2%.

Source: BT Financial Group

Page 6: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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The Australian dollar hit US$0.96 cents in May

The Australian dollar climbed to US$0.9653 cents in May, its highest level since way back in February 1983. So far this year, the local currency has risen 9% against the US dollar, helped along by strong commodity prices and relatively high domestic interest rates.

At the end of May:

A$1 bought US$0.9557 +1.4%

€0.6148 +1.8%

¥100.82 +3.0%

Source: BT Financial Group

Page 7: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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Currency markets – A$ per US dollar

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

0.5000

0.5500

0.6000

0.6500

0.7000

0.7500

0.8000

0.8500

0.9000

0.9500

1.0000

May-03 Nov-03 May-04 Nov-04 May-05 Nov-05 May-06 Nov-06 May-07 Nov-07 May-08

The Australian dollar versus the US dollar…

Page 8: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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Currency markets – A$ per Euro

the Euro…

0.5300

0.5450

0.5600

0.5750

0.5900

0.6050

0.6200

0.6350

0.6500

May-03 Nov-03 May-04 Nov-04 May-05 Nov-05 May-06 Nov-06 May-07 Nov-07 May-08

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

Page 9: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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and the Yen

70

75

80

85

90

95

100

105

110

May-03 Nov-03 May-04 Nov-04 May-05 Nov-05 May-06 Nov-06 May-07 Nov-07 May-08

Currency markets – A$ per Yen

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

Page 10: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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Official world interest rate movements – May

The European Central bank, the Bank of England, the Bank of Japan and the Reserve Bank of Australia all left their benchmark interest rates on hold in May. The US Federal Reserve, which lowered interest rates by 0.25% in April, didn’t meet in May.

Current rate Last movedDirection of last move

Australia 7.25% Mar 2008

US 2.00% Apr 2008

Europe (ECB) 4.00% Jun 2007

Japan 0.50% Feb 2007

United Kingdom 5.00% Apr 2008

Source: BT Financial Group

Page 11: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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Source: BT Financial Group

31 May 2008

Global share market returns

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

Global

S&P 500 Index (US) -8.51% 7.16% 7.76%

Nasdaq (US Tech.) -3.14% 6.84% 9.59%

Nikkei 225 (Japan) -19.79% 8.34% 11.22%

Hang Seng (Hong Kong) 18.89% 20.95% 20.93%

DAX (Germany) -9.97% 16.74% 18.93%

CAC (France) -17.85% 6.76% 10.88%

FTSE 100 (UK) -8.58% 6.84% 8.38%

Australia

S&P/ASX 300 Accum. Ind. -6.71% 16.18% 18.38%

S&P/ASX Small Ordinaries -10.25% 19.80% 22.11%

S&P/ASX 300 Listed Prop. -33.16% 3.15% 7.15%

Page 12: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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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 May 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

7.22 6.38 5.75 5.63 5.24 4.97 4.67 6.20 5.45 5.06 5.16 6.93 7.76 6.80 5.03 6.07

Australian bonds

3.65 4.64 3.84 7.58 1.94 11.17 4.95 8.56 4.54 3.05 13.92 15.22 8.39 9.34 3.22 14.53

Australian property

-33.16 40.83 16.60 14.27 12.63 15.50 20.32 11.56 14.18 -3.10 23.81 27.34 -2.24 9.84 10.27 16.85

Australian shares

-6.71 31.99 27.33 23.53 20.01 -6.89 3.40 13.59 13.02 10.79 7.83 19.99 16.12 1.59 20.76 6.19

International bonds

0.51 -6.77 0.38 2.44 -5.29 7.85 -3.54 12.77 12.53 2.48 28.10 8.52 -9.70 22.66 -4.96 28.09

International shares

-16.66

13.00 18.43 4.47 12.75 -21.92 -22.00 -4.50 29.48 9.21 46.46 22.91 6.13 13.22 0.38 28.00

Page 13: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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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 May 2008 (%)

Short-term asset class performance (cont’d)

-16.6

0.5

-6.7

-33.2

3.7

13.0

-6.8

32.0

40.8

4.5

31 May 2007

31 May 2008

Australian bonds

Listed property

Australian shares

Global bonds

Global shares

Page 14: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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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 May 2008

Australian bonds

Listed property

Australian shares

Cash

Global shares

Page 15: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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

Oil prices – US$ per barrel

Oil prices hit a record US$134 a barrel in May on concerns that supply will fail to keep up with demand

$0

$15

$30

$45

$60

$75

$90

$105

$120

$135

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

Page 16: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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Summary

The underlying strength of the Australian economy relative to its global counterparts looks set to continue in the near-term, though any significant deterioration in global growth will have an adverse effect locally.

Though the Reserve Bank of Australia left interest rates on hold following their June meeting, the Bank will no doubt be concerned by the high level of domestic inflation, which currently sits well outside its target band of 2-3%.

The Australian dollar looks set to remain at high levels in the near-term and could well hit parity with the greenback within the next few months.

Gains in global share markets, including here in Australia, are likely to remain under pressure in the near-term but are likely to stay above their recent March lows.

Page 17: BT Monthly Markets Chart Pack – May 2008 An overview of movements in global financial markets

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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.

This document was accompanied by an oral presentation, and is not a complete record of the discussion held.

No part of this presentation should be used elsewhere without prior consent from the author.

For more information, please call BT Customer Relations on 132 135 8:00am to 6:30pm (Sydney time)