March 2011 economic health check presentation


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March 2011 economic health check presentation

  1. 1. March Economic Health Check
  2. 2. Savanth SebastianEconomist
  3. 3. The New ‘Normal’Opportunities in a post-GFC worldediscoveryconsulting.blogspot.comSavanth SebastianEconomist, CommSec, March 2011
  4. 4. Important informationThis presentation has been prepared without taking account of theobjectives, financial situation or needs of any particular individual.Before acting on the information in this seminar, you should consider itsappropriateness to your circumstances and, if necessary, seekappropriate professional advice.Commonwealth Securities Limited ABN 60 067 254 399AFSL 238814 (CommSec) is a wholly owned but non-guaranteedsubsidiary of Commonwealth Bank of Australia ABN 48 123 123 124and a Participant of the ASX Group.Examples used in this presentation are for illustrative purposes only.
  5. 5. State of Play US recovers but China dominates Australia struggles Budget under pressure Aussie consumers.. Conservatism reigns Tight job markets but seniors win Interest rates on hold Aussie dollar strength
  6. 6. So What?Issue: Global economy Exchange rates, trade, sharemarket, int. rates Drivers of world economy - Contribution to growth 2011 China 0.81% United States 0.74% India 0.18% Japan 0.14% Newly Industrialised Asia* 0.13% Germany 0.13% ASEAN 5 # 0.12% Brazil 0.11% Russia 0.10% United Kingdom 0.08% France 0.07% Canada 0.05% Other countries 1.70% World 4.40% Source: IMF & CommSec * Newly industrialised Asia – Hong Kong, Taiwan, Singapore and South Korea # ASEAN 5 – Indonesia, Malaysia, Thailand, Philippines and Vietnam
  7. 7. So What?Issue: Inflation Interest rates, social stability, consumer spending
  8. 8. So What?Issue: Climate Retail, transport, agriculture, insurance, construction Highest levels for the Southern Oscillation Index (SOI) August 1917 34.8 April 1904 31.7 November 1973 31.6 December 2010 27.1 June 1950 26.9 Source: BOM & CommSec
  9. 9. Codrington, Stephen. Planet Geography 3rd Edition (2005)
  10. 10. So What? Issue: Mining boom Interest rates, investment, economic policy Drivers of the Australian economy 2007 – 2010, % contribution to the change in GDPMining 17.4%Professional, scientific and technical 11.9%servicesConstruction 11.6%Financial and insurance services 10.8%Agriculture, forestry and fishing 10.8%Healthcare and social assistance 9.7%Education and training 5.1%Public administration and safety 5.1%Transport, postal and warehousing 3.8%Wholesale trade 3.5%Source: ABS & CommSec
  11. 11. So What?Issue: Job market Interest rates, spending, costs, migration Job creation 2010 Total 368,600 3.3% 65+ 18,200 5.9% 25-34 139,200 5.7% 55-64 75,400 5.0% 45-54 56,400 2.3% 35-44 53,200 2.1% 15-24 26,100 1.3% Source: ABS & CommSec
  12. 12. So What? Issue: Spending Winners/losers, interest rates, stock pickers Relax at home with a good book – Selected sectors December quarter 2010Inflation adjusted spending Quarter changeNewspapers, books 6.1%Hardware, building & garden 5.4%Clothing retailing 4.2%Furniture, floor covering 3.2%All retail -0.3%Supermarkets -0.3%Sporting goods, toys -1.3%Cafes, restaurants -7.3%Footwear, jewellery -8.4%Source: ABS & CommSec
  13. 13. Conservatism reigns
  14. 14. So What?Housing issues Home prices to rise 5% in 2011So rental market still tight but home prices ease
  15. 15. So What?Issue: Interest rates Fixed/floating, asset allocation, returns
  16. 16. So What?Issue: Currency Asset allocation, budgeting, profitability, competition
  17. 17. So What?Issue: Shares Returns, portfolios, investor education, active/passive
  18. 18. CommSec forecasts ForecastsEconomic growth 2.75-3.00% in 2010/11 3.50% in 2011/12Inflation 2.75% in 2010/11 2.75%-3.00% in 2011/12Unemployment 4.75-5.00%, mid 2011 4.25-4.50%, end 2011Cash rate 5.00%, mid 2011 5.50%, end 2011Sharemarket 5,100 points, mid 2011 5,400 points, end 2011(Australian)Australian dollar US99c in June 2011 US92c in December 2011
  19. 19. Kaliopy KadlecBankwest Markets
  20. 20. Important information• Important Information and Disclaimer: This information is produced by Bank of Western Australia Ltd ABN 22 050 494 454 (“BankWest”). Bankwest is a wholly owned, non-guaranteed, subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 (“CBA”). The information and products discussed herein are only available to wholesale clients or sophisticated investors as defined in the Corporations Act 2001. It has not been prepared for, and must not be distributed to or replicated in any form, to anyone who is not a wholesale client or sophisticated investor in Australia. Unless specifically indicated, this document does not constitute formal advice or commitment by the sender or the CBA group. Any rates provided are purely indicative and provided for illustrative and discussion purposes only and in no way bind CBA. For firm rates please contact your Global Markets Specialist or your Relationship Manager. BankWest has not taken into account the objectives, financial situation or needs of any counterparty. Before you enter into any transaction you must ensure that you understand the risks and rewards and determine that it is suitable for you and your circumstances and is consistent with your investment objectives, as set out in your constitutional documents. CBA group and/or any of its affiliates or its employees may also own or build positions or trade in any such securities and derivatives thereon and may also sell them whenever considered appropriate. This information is confidential and no part of this document may be reproduced or distributed in any manner without the express permission of Bankwest. We believe that the information herein is correct and any opinions, conclusions or recommendations contained in this document are reasonably held or made as at the time of its compilation, but we make no warranty as to the accuracy, reliability or completeness of that information. Except to the extent that any liability under any law cannot be excluded, no liability for any loss or damage which may be suffered by any person, directly or indirectly, through relying upon any information or statement in this document is accepted by BankWest or CBA or any of their directors, employees or agents, whether that loss or damage is caused by any fault or negligence on their part or otherwise.
  21. 21. March Economic Health CheckIdeas and Strategy around minimisingInterest Rate and Foreign Exchange Risk
  22. 22. March Economic Health CheckDo you have Interest Rate Risk?
  23. 23. March Economic Health CheckHave you used Interest Rate RiskManagement in the past?
  24. 24. March Economic Health CheckAre you a Property Developer orProperty Investor?
  25. 25. March Economic Health CheckManaging Currency Exposures
  26. 26. March Economic Health CheckKaliopy KadlecGlobal Markets Specialist NSWT: 02 9117 0371M: 0437 883
  27. 27. Katie GillsBusiness Wealth Management
  28. 28. Contact usKatie GillBusiness DevelopmentExecutiveStructured InvestmentsP: (02) 9118 1467M: 0424 188 163E: 23, DP Tower 1201 Sussex Street,Sydney, NSW 2000
  29. 29. Question Time