Feb 2008

Dear Member

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

In this edition -

1. MARKET COMMENTARY

World financial markets commenced 2008 with the biggest monthly percentage falls in share prices since the share market “crash” of 1987.Contributing factors for the large falls included fears about a possible recession in the US, continued losses from several financial houses relating to difficulties from the sub-prime sector, large emergency interest rate cuts in the US and losses from Societe Generale relating to alleged fraud by one of its traders.

The Australian share market experienced twelve consecutive days of selling which culminated in a fall of 7.3% on 22nd January.This had resulted in a market decline of almost 24% since the market peak on 1st November 2007 and a decline of almost 18% since the end of the year.The market recovered by more than 7% over the next three days after the US Federal Reserve cut its official interest rates by 0.5% ahead of its official meeting at the end of the month.The overall result for the Australian market was a net fall of 11% for the month.The “better” performing sectors included health care (-6.3%), materials (-7.1%), resources (-8.5%) and telecommunications (-8.8%).The weaker sectors included listed property trusts (see chart above), financials excluding property (-12.7%), energy
(-12.5%) and industrials (-11.9%).Among the largest companies, QBE insurance fell 16.6%, Commonwealth Bank was down 16.4% and AMP fell 15.6%.The “best” performers were ANZ (-5.3%), CSL (-6.1%) and Brambles
(-7.5%).The market falls experienced since the early November peak resulted in an annual return to the end of January of only 1.5%.This compares to a three year return of 21.0% p.a. to the end of December 2007.

Major global share markets also suffered significant downfalls during January with the MSCI World ex-Australia Index falling by 8.3% in local currency terms and 9.1% in Australian dollar terms.Over twelve months, global shares were down 6.0% in local currency terms and 14.0% in Australian dollar terms.While most of the bad news behind the falls came from the US, its share market performed better than most.The Dow Jones fell 4.6% and the S&P 500 was down 6.0% while in Europe Germany fell 14.9%, France 13.2%, Italy 10.8% and Spain 13.1%.Japan’s Nikkei 225 Index declined by 11.2% in January to be down by 21.6% over 12 months.

The listed property sector had another bad month (-14.3%) as both debt levels and its structure continued to concern investors in the ongoing unsettled global climate of sub-prime problems and losses by large financial institutions.The most visible casualty of these problems in Australia remained the Centro Group.

In contrast to the US rate cuts, the Reserve Bank of Australia left its official cash rate unchanged at 6.75% in January and raised it to 7.0% in early February in line with its continued concerns about inflationary pressures.An inverse yield curve still exists in Australia with 90 day bank bill yields ending the month at 7.35% and 10 year government bonds at 6.09%.

Source: Counterpoint Group Feb 2008

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2. MARKET INDICES

Source: Counterpoint Group Feb 2008

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3. FUND PERFORMANCE

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Individual Monthly rates (PDF)

INCOME STREAM PERFORMANCE

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Individual Monthly rates (PDF)

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4. ADMINISTRATION GETS HI-TECH WITH AUTOMATED SCANNING

Anyone who has completed one of our forms recently may have noticed a new look. The admin team have been working hard to improve efficiency through the automation of some processes. That's why it is extremely important that forms are filled in correctly and clearly.

Through the use of the latest technology, forms are scanned, machine read and automatically assigned to the Account Administrator responsible for that member.This leads to faster turn around and processing times and better customer service.

Employers need to be aware that since the release of the new Product Disclosure Statement (PDS) in December we are unable to accept membership applications on the old forms. Please destroy any old forms you may have lying around.

Many details can now be updated online in the secure log-in area and for those things that can't, the forms are available for download from the web site.

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