The Australian Share market, one year on

admin — Thu, 11 Mar 2010 08:03:30 +0000

This week sees a year since the share market lows of the Global Financial Crisis were reached.

Given that it is far easier to predict the past than the future, it is interesting to note that this time last year, the Australian Financial Review ran a headline in their weekend edition (I think it was the last weekend in February) that basically stated that the love affair Australians had with stocks was finally over.

At the time, we did not know it, but I guess we can now say that that was as close as you would get to having a bell being rung to signal the bottom of the share market.

Fast forward one year and after the savaging we saw in 2008 and early 2009, many investors are now sitting on returns for the last 12 months that are some of the highest we have ever seen.

I just hope that not too many people took the advice of the nay Sayers and bandwagon jumpers to sell out at the bottom only watch the markets take off again. I hope that the sensible investors stuck to their long term plans and didn’t realize major losses – realized losses can be hard to make up.

Of course we are still not out of the woods and just as in the depression years, there is always the chance that markets may turn down again, and I have no idea what the possibility is of that happening, but even so as it is beyond my control, I wont stress too much about something I cannot control, what will you do?

Please Note:

This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.

Australian Share Market Update, March 11, 2010

admin — Thu, 11 Mar 2010 07:49:44 +0000

The All Ordinaries Index ended the day 4.3 points lower to close at 4825.5.

Myer Holdings Limited (MYR) ended the day 0.9% lower to close at $3.44 after announcing its first half net profit after tax of $115m, up 38% on 1H09. MYR declared a fully franked interim dividend of 10.5cps.

Leighton Holdings Limited (LEI) gained 1.7% to close at $39.65, after securing a $463m contract for the construction of tunnels and ventilation buildings for a proposed high-speed rail link between Hong Kong and China.

Major stock rises:

Lend Lease Group (LLC) $8.66 +3.71%
Telstra Corporation Limited (TLS) $3.07 +2.68%
Caltex Australia Limited (CTX) $11.14 +2.58%
Tatts Group Limited (TTS) $2.47 +2.49%
Orica Ltd (ORI) $25.87 +2.21%

Major stock falls:

Lihir Gold Limited (LGL) $2.90 -2.68%
Seek Limited (SEK) $7.41 -2.63%
Downer EDI (DOW) $7.68 -2.54%
Computershare Limited (CPU) $12.17 -2.17%
Transurban Group (TCL) $5.16 -1.71%

Please Note:

Australian Share Market Update for March 10, 2010

admin — Wed, 10 Mar 2010 08:05:06 +0000

The All Ordinaries Index ended the day 0.5 points higher to close at 4829.8.

Alesco Corporation Limited (ALS) ended the day 31.6% lower to close at $3.12 after downgrading its full year profit estimates. ALS now expects earnings (EPS) for FY10 to be in the range of 24-27 cents, materially lower than the previous guidance of 34-36 cents.

Aurox Resources Limited (AXO) gained 172.2% to close at $0.73, after receiving a $143m takeover offer from Atlas Iron Limited (Atlas). AXO share holders will receive one AGO share for every three AXO shares held upon implementation. The Aurox Board unanimously recommends security holders vote in favour of the proposal. AGO gained $0.10 to end the day 4.5% higher at $2.31.

Major stock rises:

Computershare Limited (CPU) $12.44 +3.49%
Lihir Gold Limited (LGL) $2.98 +3.11%
Boral (BLD) $5.58 +2.76%
Telstra Corporation Limited (TLS) $2.99 +2.75%
Qantas Airways Limited (QAN) $2.84 +2.53%

Major stock falls:

Alesco Corporation Limited (ALS) $3.12 -31.58%
Nufarm Limited (NUF) $8.38 -8.91%
Mirvac Group (MGR) $1.50 -3.53%
Stockland Group (SGP) $4.07 -2.63%
Coca-Cola Amatil Limited (CCL) $11.17 -2.53%

Please Note:

Australian Market Update for March 9th, 2010

admin — Tue, 09 Mar 2010 09:19:19 +0000

The All Ordinaries Index gained 0.2 per cent to end the day 9.7 points higher at 4829.3.

Billabong International Limited (BBG) gained 2.2% to close at $10.90 despite announcing it is subject to a civil claim in Indonesia by its former Indonesian licensee regarding the termination of its licence to distribute products in Indonesia. BBG’s business in Indonesia represented approximately 0.7% of the Group’s global sales in FY09.

Centrebet International Limited (CIL) gained 10.4% to close at $1.80, after announcing it has received a number of non-binding proposals from various parties regarding the acquisition of the Company. CIL is currently in discussion with the prospective parties.

Major stock rises:

Brambles Limited (BXB) $7.50 +4.02%
ConnectEast Group (CEU) $0.44 +3.53%
WorleyParsons Limited (WOR) $25.17 +2.78%
Billabong International Limited (BBG) $10.90 +2.25%
QBE Insurance Group (QBE) $21.10 +2.13%

Major stock falls:

Intoll Group (ITO) $1.17 -3.69%
Energy Resources of Australia Limited (ERA) $18.60 -2.92%
OneSteel Ltd (OST) $3.60 -2.70%
Ansell Limited (ANN) $11.77 -1.92%
Lihir Gold Limited (LGL) $2.89 -1.70%

Please Note:

Trivia, panic, or are we just getting old?

admin — Mon, 08 Mar 2010 06:49:16 +0000

Did you know that our global population is ageing so fast that within 10 years, the number of people aged over 65 will outnumber all the children in the world under the age of 5?

A useless fact no doubt – but those over 65 cost more to keep alive than those under 5, and generally neither of those age groups are working. Although for all those 5 years old out there, given our increasing medical costs, they may find themselves back in the salt mines or cleaning chimneys.

Please Note:

Fees versus Commission

admin — Mon, 08 Mar 2010 01:37:15 +0000

This is an update to a blog posted nearly 2 years ago and the issue is still being discussed, but in relation to finding a Financial Planner what does and should matter to you, the client?

The topic of fees versus commission was written about by every financial columnist over the past 2 – 3 years, but more so during the height of the Global Financial Crisis. The call being for fees to be the method of payment – by the client, and commissions – payable by the product provider being stopped.

In a nutshell financial advisers receive payment from their employer, the client, through either commissions or by charging a fee for the service provided. The fee may be fixed or based on an hourly rate, or a combination of both which is used by many financial advisers. In reality the client pays the commission – the product provider will recoup this amount from the fees they charge over time anyway.

So what should you look for in terms of fees when seeking out a financial adviser? There are plenty of independent websites and organisations that can give you tips and advice, so look around and do your homework. But what’s important here is that consumers should be given a choice. Not all consumers want to pay fees for services up front and are happy to pay adviser fees in the form of commissions.

Providing clients are kept informed of commissions and fees, such a strategy may suit a client. The down side is that advisers may be influenced to recommend investments with higher commissions and the client may not always be told of alternative investments that may be equally as good with lower fees. An adviser may also continue to receive trail commissions even if a client chooses to no longer use their services but retain their investment. However recent changes to a number of product providers means that the client may be able to turn off trailing commissions where there is no service being provided - this is a great thing for consumers.

When engaging an adviser who charges a fee for service, make sure you discuss and agree on the costs to be charged. Charging directly for a service is a good incentive for a planner to give good advice and service but costs come straight out of your pocket and are often charged in advance.

While there will always be a debate of the pros and cons of commission versus fees, scrapping commission completely from the industry removes the right for consumers to choose.

The true issue is transparency.

Please Note:

Australian Market Update for 5th March 2010

admin — Fri, 05 Mar 2010 08:40:22 +0000

The All Ordinaries Index gained 15.8 points to close 0.33% higher at 4773.4.

Lihir Gold Limited (LGL) ended the day 1.02% lower to close at $2.91 after announcing it has entered into an agreement with Castlemaine Goldfields Limited (CGT) for the sale of the Ballarat Gold Project in Victoria. The company will receive $4.5m in cash plus an additional 2.5% royalty interest in future production, capped at $50m. The deal is subject to CGT shareholders approving a $20m equity issue, along with other conditions.

Fortescue Metals Group Ltd (FMG) ended the day 2.05% lower to close at $4.78 after announcing that the Government of WA has approved the development of green field port facilities at Anketell Point on the West Pilbara coast. Completion of the project is expected in late 2013 with an initial design capacity of 40Mtpa.

Major stock rises:

CSL Limited (CSL) $35.68 +2.53%
Crown Limited (CWN) $8.28 +2.35%
Suncorp-Metway Ltd (SUN) $8.69 +2.24%
News Corporation (NWS) $18.06 +2.03%
QBE Insurance Group (QBE) $20.50 +1.99%

Major stock falls:

Fortescue Metals Group Ltd (FMG) $4.78 -2.05%
Toll Holdings Limited (TOL) $7.15 -1.24%
WorleyParsons Limited (WOR) $24.59 -1.13%
Lihir Gold Limited (LGL) $2.91 -1.02%
Telecom Corporation of New Zealand (TEL) $1.72 -0.86%

Please Note:

Insurance for kids

admin — Wed, 10 Dec 2008 01:48:31 +0000

Did you know 1,055 young Australians aged between one and 19 years died in 2006? One of the leading causes of death for those under 12 was cancer, whereas teenagers are were likely to die from transport accidents. These sobering statistics are outlined in The Australian Government’s Australian Institute of Health and Welfare’s report Making Progress The health, development and wellbeing of Australia’s children and young people.1

I was reminded of these statistics recently when reading a Courier Mail article ‘Banking on a cure for kids’ cancer’. The gist of the Courier Mail article was to highlight the creation of a new Queensland Children’s Tumour Bank that stores tumours removed from children to help find better treatment and cures.

What caught my eye in the article was the story of a 13 year old girl diagnosed with a kidney tumour. The young patient and her mum left their home town in December for treatment in Brisbane, 500 kilometres away, and did not return until July the following year – some seven months later.

Let’s face it, it’s every parent’s worst nightmare that their child will be diagnosed with an illness such as cancer. As a parent myself, I felt both sympathy and admiration for the parents, the family and the young patient as they dealt with what I image would have been an hugely emotional roller coaster as she battled her illness.

Emotionally, as parents, we all know how difficult such as separation would be for everyone in the family. But what about the financial aspect? When one parent leaves town to accompany a sick child the family income drops and costs rise. The family home turns into two households to support, there are extra travel costs, not to mention the medical expenses.

We all like to think that our kids won’t get sick, seriously injured or die. However, statistics in the Australian Institute of Health and Welfare report shows that in the 2006-07 year there were 75,000 injury admissions to hospital Australia wide in the five to 19 year old age group. The report also notes that in 2003 more than 120,000 Australians had a disability where their main disabling condition was caused by an injury that occurred before the age of 20.

When it comes to insurance, you’re probably familiar with trauma and death cover for adults, but did you know child cover is also available? Many insurers now offer a child policy providing cover on a range of conditions such as cancer or an organ transplant. Such policies may also extend to injuries such as burns, head trauma, loss of limbs or sight and paralysis.

As awful as it is to think of your child being terminally ill, sick or injured, taking out child cover will provide your family with some financial cushioning in the event of a serious medical event, leaving you free to concentrate your energies on supporting your sick child.

Your child’s cover will need to be taken out in conjunction with your life or trauma insurance and the option is not available if the policy is owned through a super fund. Also keep in mind that you cannot insure your child if they are under two years of age.

When your child turns 21, the policy will automatically transfer into their name without the need to provide any further medical information, although the policy may include any exclusions, medical or pastime loadings that applied to the original child cover option.

If you’d like to know more the child cover option, contact our insurance advisor Cheryl Bronson on 1300 766 323.

1 The Australian Government’s Australian Institute of Health and Welfare’s report Making Progress The health, development and wellbeing of Australia’s children and young people. http://www.aihw.gov.au/publications/phe/mp-thdawoacayp/mp-thdawoacayp.pdf

Please Note:

Life insurance claims – myth versus reality

admin — Mon, 08 Dec 2008 00:05:31 +0000

If you died, would your insurance company pay out your life insurance policy?

Recent research by ING(1) revealed many people are reluctant to take out life insurance cover because of a belief that insurance companies will not pay out a life policy upon the policy holder’s death.

Unfortunately it is a common perception by many that life insurance companies are in the business of avoiding payment of claims. The reality in fact is very different but before I explain, remember that at the end of the day insurance companies are also a business. Like all good businesses they must minimise risks, manage their expenditure and aim to maximise profitability in order to provide returns to their shareholders.

Managing these factors ensures the company is a viable business able to pay out on genuine claims as they arise. Judging by the number of calls our office received during the recent AIG hiccup, we believe clients want to insure their lives and their quality of life with a company that is reliable, viable and credible. For more information see our article What happens when your insurance company goes broke.

Getting back to the matter of insurance companies and payment of life insurance claims, last year the insurance industry paid out more than $2 billion in claims. That’s an average of $8.39 million every working day handed over to support Australians. $1.6 billion alone was paid out on life insurance policies.

In the unfortunate event that your family or estate needs to make a claim, your financial planner should be your first point of contact. They will notify the life insurance company, collect the necessary paperwork on your behalf and assist you to complete the paperwork.

The expected timelines for processing of the claim may depend on the sum insured. Most claims however will be processed as soon as proof of death is received by the insurance company. Many insurance companies give an advance emergency payment to cover immediate expenses such as funeral expenses – hardly the kind of behavior you would expect from an organisation avoiding payment at any cost. If there is a hold up of the death certificate, other forms of proof such as a cremation certificate may be acceptable to the insurance company.

In our experience in dealing with life insurance claims in Australia, we have not been involved with any claims that have been rejected. In the event that a claim is rejected, usually it is because dishonesty has played a role such as the non disclosure of information when the policy was taken out, or outright fraud such as faking one’s own death.

Remember, life insurance isn’t about you it’s about those you leave behind. There’s a policy to suit every life style and every budget, so if you need to have a second look at your insurance situation, pick up the phone and contact your financial planner to discuss a plan that suits.

You don’t have a financial planner? We can help and everything can be done online, offline, over the telephone or through the mail, so call us on 1300 766 323.

Investor Daily, Life cover myths pervading the country,[online] http://www.investordaily.com.au/cps/rde/xchg/id/style/5428.htm?utm_source=newsletter&utm_medium=email&rdeCOQ=SID-3F579BCE-B4B14B3B

Please Note:

One person’s trash is another person’s treasure

admin — Tue, 02 Dec 2008 00:16:49 +0000

Despite the best efforts of world leaders, stock markets continue to roller coaster and at the moment there seems to be more downhill runs than uphill climbs. Recently we saw a massive sell off in global share markets, the likes of which we have not seen since 1987.

Without being alarmist, it has not been fun ride for those who have chosen to stick it out in the share market. For many, shares are now just trash to be offloaded as quickly as possible before any more losses are made. No doubt there are many people who have lost lots of money by selling during this period of extreme volatility. I doubt if many of those people will ever recoup those losses. Many will be first time investors into the markets and most likely will never re-enter the markets again – or unfortunately only enter when they peak next time and will no doubt go through this same phase again.

Many who have sold out have invested their money in cash, believing this is a safe option. For spooked investors, there is no doubt that cash offers an alternative but is it really the treasure they believe it to be? Cash pays virtually nothing and depreciates in value as inflation and tax eat into it. Market Metrics 2008 produced by the Commonwealth Bank notes that cash also has additional hidden costs such as capital gains tax or capital losses if assets have been sold to make the switch.

The Bank also notes that for those who sold their shares during this period of volatility, by the end of 2010 they will be worse off if the market recovers to its previous peak. Now I haven’t the foggiest as to where the markets will be in one week, one month or in a year’s time, but what I do know is that share markets will rise again, and history has shown that when markets rise they often rise rapidly and in substantial leaps.

So while today’s share market may be just trash to some, smart investors know that a volatile share market is a potential treasure as it offers opportunities to buy shares at discounted prices. Yes things are bad, but now is the time when smart actions will see smart investors reap the rewards of the recovery that will happen – it has to, just as all good things come to an end, so do bad things.

Please Note: