WEEKLY E-MAIL

10 July 2017

EVENTS OF THE 2016/17 FINANCIAL YEAR

By Nicola Beswick

As the 2016/17 Financial Year closes, one could easily have thought we went nowhere. However, the S&P/ASX 200 Accumulation Index returned 14.09% over the 12 months, ending 30 June 2017.

We started the year off the back of a surprise UK referendum result to exit the European Union. In a short space of time the ASX dropped but then recovered.

While the ASX recovered from Brexit, there were ongoing concerns regarding the stability of the European Union lingered, talk that the USA would rapidly increase interest rates continued, and concerns around an oversupply of oil leading to OPEC reducing production rates.

Donald Trump surprised many by winning the primary election to become the Republican US Presidential nominee. However, the biggest surprise came in November, when he beat Hilary Clinton to become the 45th President of the United States.

We also saw a number of key Parliamentary elections take place throughout Europe. The world watched the outcome of many of these elections closely, as many of candidates stood for anti-establishment views. In the French, Austrian and Dutch elections the ‘anti-establishment’ parties lost to their more conservative counterparts. However, we still have the Germans taking to the polls later on in September.

Somewhere amongst all of this, Australia also had a Government election.

While at the time, these events seemed to severely impact the ASX, the 12 month return was positive – the best gain in the previous three years. However, in the last three months, the ASX has been in negative territory.

These figures, plus other various markets returns, are shown below:

Resources rallied at the start of the Financial Year, however they soon slumped towards the end of the Financial Year. Oil was down 11%, while iron ore prices have lifted marginally. Listed Property lost more than 6% over the past 12 months, while Unlisted Property returns increased more than 14% for the 12 months (ending 31 May 2017).

While we had a large number of events occur around the world, returns in global markets were more positive than Australian market returns. Global infrastructure and Asian shares also returned positive results.

Looking forward, many of the same themes remain of concern, including the US political situation, oil prices, and highlighted Geopolitical tensions.

On the home front, Australia remains in a low inflation environment, and interest rates remaining at their record low of 1.50%. However, concerns around the Australian housing market remain front of mind, as it is likely more apartments become available for sale and Australian banks continue to tighten their lending to investors and apartment purchases.

Nicola Beswick
Financial Planner
SMSF Specialist Advisor™
Authorised Representative No. 459008

If you have any questions or comments, please email me at nicola@gfmwealth.com.au

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