News & Views
Economic Update - 2011 June Issue # 36
While many thought that the world markets would recover strongly over 2011 it seems we have been stuck in a rut over the past few months with most investment markets tracking sideways.
While markets are often driven by fear and greed we cannot ignore the underlying economic factors that also serve to drive investment markets on a global scale.
Europe
Greece continues to cause concern for the Eurozone. Whilst Greece accepted a bailout last year they are in need of another 12billion Euro’s to repay maturing debt. Unfortunately, the country is experiencing trouble in trying to employ the austerity measures placed on them by the European Union and there is fear Greece will default. Greece has had its credit rating downgraded and is currently the world’s least credit-worthy country.
Asia
China continues to battle inflationary pressures with little sign of easing. With 200 million people set to urbanise (move from rural to city areas) over the next 10, it will be difficult to keep a lid on inflation. As these new city dwellers demand more and more of the necessities, such as food, prices will rise, causing further inflation.
America
Whilst America is currently holding huge levels of debt (around $14 trillion of public debt), there is a general consensus that the World’s biggest economy will right itself over the coming years.
Despite the ongoing need for tough policy, major changes are unlikely to occur until after the presidential elections late next year. This will constrain the US growth outlook and continue to put downward pressure on the $US
Australia
Australia’s interest rate remains at 4.75 per cent but there is increasing pressure for the Reserve Bank to raise rates later this year. Inflation is close to the upper limit of three percent, and while anomalies like floods and cyclones may have pushed inflation above 3 per cent in recent months, the RBA will closely monitor the situation to keep the economy in check. We remain firm that the RBA will increase rates later this year.
Australia recorded a Gross Domestic Product (GDP) figure of -1.2 per cent last quarter; its worst result since the height of the GFC. Upon further investigation we find that the primary cause of this negative result was the Queensland floods which cut supply of commodities, such as coal, to the rest of the world. This meant we exported less over the quarter, causing a contraction in GDP.
While still above parity, the Australian dollar has fallen from its recent highs of $US1.10 to find itself hovering around $US1.05. With GDP contracting and overall softness in the commodity market a fall in the $AUD is to be expected. However, we still think that the dollar will stay above parity for the foreseeable future.
Posted: 30th June 2011
Written By: Simon Curtain - Private Client Adviser
Economic Update - 2011 June Issue # 36
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Young Australians must approach financial fitness like a gym workout, says Hewison Private Wealth
Young Australians must approach financial fitness like a gym workout, says Hewison Private Wealth
Young Australians eager to ‘get rich quick’ may be disappointed to hear that wealth creation can be as tough as achieving washboard abs, but those who attended a Young Investors Wealth Forum, hosted by Hewison Private Wealth, in Melbourne last week were in for a reality check.
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Super strategies to consider for financial year end, Hewison Private Wealth.
Super strategies to consider for financial year end, Hewison Private Wealth.
With one month to go until the end of this financial year, wealthier investors would do well to review their superannuation strategy and maximise their super savings before changes announced in this year’s Federal Budget kick in, Melbourne financial advisory firm, Hewison Private Wealth, has warned.
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Shorten’s ban on asset transfers a gamble for SMSFs
New rules announced within the latest Stronger Super reforms package, banning self-managed super funds (SMSFs) against making in-specie asset transfers, will disadvantage SMSFs and exposes them to greater costs and risks, warns Hewison Private Wealth.
John Hewison, CEO of Hewison Private Wealth, said while the move to introduce MySuper and cut costs for superannuation members has been... -
Market volatility continues as expected but there are some very positive signs coming out of Europe and the US. This should go a long way towards bringing some stability and confidence in global share markets which we expect would have a direct influence on our markets in Australia.
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The Age Money "Where can we put it?"
It is a question that has probably crossed the minds of many people in their mid-life years who have some spare cash. Is it better to put the money towards paying off the mortgage or into superannuation?
The kids may have finished school or one of the partners may have returned to full-time work and there is some spare cash for the first time in years. But the superannuation balance i... -
The Age Money "Step right up and do it yourself"
More people are leaving their large superannuation funds to start self-managed super funds (SMSFs) because they want more control over how their retirement savings are invested.
•A closer look at costs
•'I was overwhelmed by paperwork'
•Cooper: 'No safety net' on SMSF losses
But SMSFs, or ''DIY'' funds, have potential pitfalls, especially for those who are not ... -
Investor Daily "High returns possible in low-interest environment: Hewison"
Investors should aim to diversify their investment strategy to achieve strong returns in a low-interest rate environment, according to Hewison Private Wealth.
Despite low interest rates affecting the net income of cash investors, Hewison has said it is still possible for investors to achieve high returns - if they take a long-term view of their wealth management.
"It's i... -
Invsetor Daily "Comprehensive advice important for SMSFs"
Scaled advice option shouldn't take focus
Self-managed super fund (SMSF) trustees should rely on holistic advice when building their retirement savings, according to Hewison Private Wealth.
While scaled advice options form a core part of upcoming industry reforms, Hewison have said the new provisions should not take the place of more comprehensive advice when it ...
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What is Asset Allocation?
Asset allocation is the percentage allocation of investment funds to the various investment classes, the main ones being –
· Cash
· Real estate property
· Australian shares
· International shares
· Fixed and variable interest
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From the CEOs Desk - 2011 June Issue # 36
It has certainly been a long hard slog for investors with the Australian sharemarket remaining flat despite all the positive economic indicators. We have low unemployment, a booming resource sector, apositive GDP outlook as forecast by the International Monetary Fund and the Reserve Bank. So why isn’t our share market booming? Major global share markets have recovered despite their economies co...
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Are the good times over for property? June issue # 36
Over the past ten years Australians have experienced a residential property super cycle where values have increased considerably over this period. The main drivers of this meteoric rise have been historically low interest rates, low unemployment, government grants for first home buyers and the strongest terms of trade seen in 140 years. The only hiccup during this period was from late 2007 through...
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Economic Update - 2011 June Issue # 36
While many thought that the world markets would recover strongly over 2011 it seems we have been stuck in a rut over the past few months with most investment markets tracking sideways.
While markets are often driven by fear and greed we cannot ignore the underlying economic factors that also serve to drive investment markets on a global scale.