Jan 2008

Dear Member

Welcome to the January edition of the WA Local Government Superannuation Plan newsletter, brought to you by the team at Western Financial.

You will notice the Fund Performance information now refers to the new names given to some of the investment options as well as the two new options.

In this edition -

1. MARKET COMMENTARY

Listed below is the investment commentary for December 2007 from the Fund’s asset consultant, the Counterpoint Group.

World share markets finished calendar 2007 on a trend of negative sentiment with many markets recording their second consecutive month of negative returns. Concerns relating to the potential widening of the effects of the US sub-prime problems continued to generate investor nervousness as many central banks expressed concern over the economic impacts.

The Australian share market recorded its second successive month of negative returns lower than -2%. Listed property trusts were the worst performing sector, with a decline of -6.6% (see below). The industrials sector fell by 5.2%, materials were 3.5% lower and the financials sector (excluding listed property trusts) was down by 2.7%. With a background of general strength in resources, smaller resource stocks achieved modest gains for the month, while some of the largest resource companies had big declines. BHP Billiton and Rio Tinto fell by 6.6% and 7.7% respectively, reflecting concerns about the continued pace of economic growth going forward. In the industrials sector, earnings downgrades and a general lack of confidence resulted in weakness. In contrast, the energy sector was 1.6% higher due to firmer oil prices. Smaller companies overall tended to match the larger market, with a decline of 2.4% for the Small Ordinaries Index.

Overseas markets were slightly mixed in December with most major markets either recording relatively small gains or losses. In local currency terms the US S&P 500 Index fell by 0.7%, the UK FTSE Index rose by 0.3% and the German DAX 200 Index rose by 1.3%, while the Japanese Nikkei 225 Index, as one of the major markets’ more significant movers, declined by 2.4%. Currencies were also mixed as the Australian dollar fell against the US dollar (-0.7%) and Euro (-0.3%), rose against the GB Pound (+2.6%) and was flat against the Yen. The RBA Trade Weighted Index fell by 0.3%. In December the US Federal Reserve cut its cash rate to 4.25% and Britain’s cash rate was cut to 5.5%. The Bank of England, European Central Bank and the US Federal Reserve will meet in early, mid and late January respectively. Their decisions and comments are likely to set the tone for markets in early 2008.

The listed property trust sector had another bad month following Centro’s problems with refinancing its short term debt. Centro fell over 80% while various other trusts also fell by more than 20%. However the sector’s largest company, Westfield, rose by 2.7% thereby moderating the sector’s monthly decline to “only” 6.6%. The sector lost 8.4% in 2007. This was the first negative year since 1999 with all years since then except one achieving strong double digit returns.

In contrast to the cuts by some overseas central banks mentioned above, the Reserve Bank of Australia left its official cash rate unchanged at 6.75% in December, but again expressed its concerns about inflationary pressures. An inverse yield curve still exists in Australia with 90 day bank bill yields ending the month at 7.24% and 10 year government bonds at 6.33%.

Source: Counterpoint Group Jan 2008

Back to top

2. MARKET INDICES

Source: Counterpoint Group Jan 2008

Back to top

3. FUND PERFORMANCE

Printer friendly version (PDF)

Individual Monthly rates (PDF)

INCOME STREAM PERFORMANCE

Printer friendly version (PDF)

Individual Monthly rates (PDF)

Back to top

4. DEARSON'S DIATRIBE - THE WORLD OF SPORT ACCORDING TO CHRIS (BACK BY POPULAR DEMAND)

The cricket season is already drawing to a close with the last test over and Australia hanging on for a 2-1 win against India in a hard fought and at times bitter test series. Some great cricket and some real low points especially the Harbijan Singh episode.

The retirement of Gilly was a surprise to many of us and his swashbuckling batting style will be sorely missed.

It’s like 10 green bottles out there at present as the old guard Aussie players reach pensioner age and retire. The other teams will be happy as Larry with the possibility that the Aussie team will weaken – though hopefully not as much as they did in 1983!!

Locally the Western Warriors have improved on last year but still look like missing out on the finals.

On the rugby, the practice match in Perth for the Western Force against the Reds is next week (7 Feb) – get to Members Equity stadium if you can. The boys are then off for their South Africa leg with their 1st match on 15 Feb – it’s going to be a tough start to the season.

On the soccer, Arsenal have made it to the top of the Premier League but my team Spurs have gone one better.

We have made it to the final of the League Cup by beating Arsenal 5-1!! This is our first win over Arsenal in about 10 years and our first cup final in even longer so all Spurs supporters are on cloud 9!

Chelski supporters like one of our Retirement Planners Gavin Smith will try to spoil the party in the Final at the end of February. Gavin wanted to put some of his anti Spurs comments here but was vetoed by the Sports Section management ( that’s me).

Locally Perth Glory has finally finished their horrible season in the A League – they even got off the bottom of the ladder in the final 2 weeks.

In Basketball, the Wildcats are in the top 4 and should be competitive in the Finals but are unlikely to win – this has been one of their worst seasons for injuries so they have done well considering.

That’s all for now folks

Editor’s additional comment – for cycling enthusiasts!

I just returned from 3 days in South Australia where myself and a few mates participated in the Community Challenge ride which is 134km through the hills from Mannum to Strathalbyn as part of the Tour Down Under (TDU). I had very sore legs for a couple of days.

This was the 10th year anniversary of the TDU and the first time the event has been part of the International Pro Tour. Congratulations to Germany's Andre Griepel who was the overall winner. More than half a million people turned out to watch the various stages of this wonderful event.

Back to top