Market Activity

Market Activity

Over the month of May, the best performing sectors were International Emerging Equities (in local currency terms) and Australian Equities. Over three months, the top performing asset class was International Equities (in local currency terms). The worst performing sector in this period was Australian LPTs.
Performance Summary as at 31 May 2008
	% MOM	% 3 Months	% YOY	% CYTD	FY 2007	FY 2006	FY 2005	FY 2004
Australian Equities	1.7%	2.7%	-6.7%	-9.2%	29.2%	24.0%	26.0%	21.7%
International Equities ($A)	0.2%	3.7%	-17.0%	-10.9%	7.4%	19.9%	-0.2%	19.7%
Australian LPT	-8.9%	-5.1%	-33.2%	-23.3%	26.3%	18.1%	18.4%	17.2%
Australian Fixed Interest	0.1%	1.7%	3.7%	2.3%	4.0%	3.4%	7.8%	2.3%
International Fixed Interest ($A Hedged)	-0.8%	-1.1%	7.9%	1.8%	5.2%	1.0%	12.3%	3.2%
Cash	0.7%	2.0%	7.2%	3.2%	6.4%	5.8%	5.6%	5.3%
Intl Emerging Equities ($A)	0.5%	2.2%	5.2%	-10.1%	26.6%	39.0%	22.5%	28.6%
International Equities (Local)	1.6%	5.6%	-9.0%	-4.8%	21.4%	15.0%	9.8%	20.2%
Intl Emerging Equities (Local)	1.9%	4.6%	17.7%	-2.8%	39.0%	33.7%	26.6%	30.0%
Sources: at 31st March 2008; Van Eyk estimates, S&P/ASX, FTSE, JPMorgan Broad GBI, UBS, Lehman Brothers
Market developments during May and early June included: International emerging markets had a strong month, rising by 1.9% in local currency terms. However, this was dampened by the strength of the Australian dollar, which brought returns back to 0.5%. Global developed markets also performed well, returning 1.6% for the month. Again the Australian dollar pulled back the gains with international equities rising just 0.2% in A$ terms. Australian equities returned 1.7% for the month, led by the energy sector which rose 19.7%. Financials such as Westpac, Commonwealth and Macquarie, but with the notable exclusion of takeover target St George, had a poor month. Australian LPTs severely underperformed the broader market, falling 8.9% for the month over concerns about interest rates and the quality of earnings. Continued strength in commodity prices, coupled with a widening forward interest rate differential, saw the A$ move 2.4% higher to US$0.96. International fixed interest lost 0.8% in A$ terms. This was primarily due to the strength of the A$, coupled with the expectation that US monetary policy easing may have come to an end. Australian fixed interest was up just 0.1% over the month, with higher inflation expectations continuing to push interest rate expectations higher.