Transcript Australian Sharemarket Performance – ASX200

A Global Economic and
Market Outlook
Presented by Dr Chris Caton
March 2009
Financial Market Forecasts
Now
(27 Feb)
End-Jun
2009
End-Dec
2009
0. 640
0.69
0.73
Official cash rate (%)
3.25
2.50
2.50
10 Year Bond yield (%)
4.31
4.40
4.60
3345
3700
4200
AUD/USD
ASX 200
2
The Australian Dollar and US Trade Weighted
Index
Index
AUD/USD
161
1
AUD/USD (RHS)
147
0.91
132
0.82
US TWI inverted (LHS)
118
0.73
103
0.64
89
0.55
03
Source: Datastream
3
04
05
06
07
08
09
Exchange-rate volatility has been very high
4
Australian Sharemarket Performance – ASX200
7000
6500
6000
5500
5000
4500
4000
3500
3000
2500
2000
1500
1000
93
94
Source: Bloomberg
5
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
Australian Sharemarket Performance – ASX200 (log
scale)
10000
1000
93
94
Source: Bloomberg
6
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
Australian p/e ratios
7
Largest falls in Australian equities
8
US Housing starts and Permits
2.4
(Millions)
Permits
Starts
2
1.6
1.2
0.8
0.4
96
97
Source: Datastream
9
98
99
00
01
02
03
04
05
06
07
08
09
Total US Non-farm Employment
3mth / 3mth chg
1.6
1.2
0.8
0.4
0
-0.4
-0.8
-1.2
-1.6
71
73
Source: Datastream
10
75
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
2009 Growth Forecasts (%)
Month of Forecast
A-08
S-08
O-08
N-08
D-08
J-09
F-09
Australia
2.6
2.6
2.1
1.7
1.1
0.9
0.3
New Zealand
1.7
1.7
1.3
0.6
0.2
-0.2
-0.9
US
1.4
1.4
0.0
-0.6
-1.3
-1.8
-2.1
Japan
1.2
0.9
0.5
-0.1
-0.9
-1.7
-3.8
China
9.2
9.1
8.8
8.1
7.8
7.4
7.0
Germany
1.1
0.8
0.3
-0.4
-1.2
-2.0
-2.5
UK
0.9
0.6
-0.2
-0.9
-1.5
-2.2
-2.6
“World”
2.6
2.5
1.9
1.1
0.4
-0.2
-0.8
Source: Consensus Economics
11
Trading partners growing significantly below trend
12
Real GDP growth in Australia and the US
Year to % change
10
US
Australia
8
6
4
2
0
-2
-4
80
82
Source: Datastream
13
84
86
88
90
92
94
96
98
00
02
04
06
08
The Labour market
000’s
%
11000
11.0
10500
10.0
Employment (LHS)
10000
9.0
9500
8.0
9000
7.0
8500
6.0
8000
5.0
Unemployment Rate (RHS)
7500
4.0
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Source: ABS
14
Australian Inflation
%
9
Headline CPI
8
Underlying inflation
BT
Forecasts
7
6
GST
Effect
5
4
3
2
1
0
-1
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
Source: ABS
15
Petrol Prices relative to CPI
1.5
1.4
1.3
1.2
1.1
1
0.9
0.8
80
Source: ABS
16
82
84
86
88
90
92
94
96
98
00
02
04
06
08
Household debt and interest
17
Hang on…help is on the way
18
House Prices - Australia v Brisbane
650
Index (1987 = 100)
Brisbane
600
Australia
550
500
450
400
350
300
250
200
150
100
87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Source: ABS
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Commodity prices are finally falling
Real metal prices
2000 = 100
450
400
Deflated by
US CPI
350
300
250
200
150
100
50
59
64
69
74
79
84
89
Sources: IMF International Financial Statistics; US Bureau of Labor
Statistics; Economics@ANZ.
20
94
99
04
09
Gross Domestic Product
%
8
7
Qtly growth
Year-to growth
Non-farm year-to growth
BT
Forecasts
6
5
4
GST
Effect
3
2
1
0
-1
-2
-3
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: ABS
21
Global Medium-Term Economic Growth and
Inflation Prospects (2008-2021)
Australia
New Zealand
United States
Canada
Sweden
Norway
Spain
United Kingdom
France
Netherlands
Switzerland
Euro zone
Germany
Japan
Italy
Source: Consensus Economics
22
GDP
Inflation
2.9
2.5
2.3
2.3
2.1
2.0
1.9
1.8
1.6
1.5
1.5
1.5
1.2
1.0
0.9
2.8
2.6
2.0
1.9
2.2
2.4
2.3
2.1
1.7
1.8
1.4
1.9
1.5
0.3
2.0
Asia-Pacific Medium-Term Economic Growth and
Inflation Prospects (2008-2018)
China
India
Indonesia
Malaysia
Thailand
Singapore
Taiwan
South Korea
Hong Kong
Australia
New Zealand
Japan
Source: Consensus Economics
23
GDP
Consumer Prices
8.5
7.5
5.8
5.3
5.1
4.8
4.4
4.2
4.1
2.9
2.5
1.0
3.7
5.2
6.0
3.0
3.3
2.5
2.1
2.9
3.2
2.8
2.6
0.3
Morgan Stanley Capital Indexes
3600
Developed Index
Asian Emerging Markets Index
3300
550
Asian Emerging Markets Index (RHS)
3000
500
2700
450
2400
400
2100
350
1800
300
1500
250
1200
200
World Developed Index (LHS)
900
150
600
100
02
Source: Datastream
24
600
03
04
05
06
07
08
09
Summary
 2009 will be a very poor year for the world economy. A
deep recession in the US is (more than) fully priced in.
The risk is that it drags on.
 The Australian economy has slowed, and is almost
certainly already in recession. No matter what, it will be
a tough year for many.
 Interest rates will continue to fall.
 The exchange rate is below fair value and likely to rise.
 Stocks are cheap right now.
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