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Archive for Financial Planners

Have the Sharemarkets Bottomed Out Yet?

At Approved Financial Planners in Perth, we have more than 80 years’ combined experience in the financial industry. We also have the full resources of our parent company, AMP Capital. One of the best resources AMP Capital has made available to us is their Chief Economist and Head of their Investment Strategy Team, Dr Shane Oliver.

Financial Planners on Sharemarkets

Recently, Dr Oliver wrote an article on the AMP Capital company blog called, “Have we reached the bottom?” It is a concise analysis of our current economic situation and contained his projections for the near future. We would like to share some of his ideas with you.*

The Reserve Bank of Australia (RBA) left the interest rate on hold at 2.0% during their first meeting of 2016. Dr Oliver believes their reasoning to be “reasonably solid economic data within Australia” and “global economic turmoil.” He also projects another rate cut of 0.25% to provide more relief for the Australian economy.*

How Oil Prices Affect Our Economy

Within the past two years, oil prices have dropped between 70-80%. Since we are a “net energy exporter,” many of our gas export contracts will go out at lower prices. This will create less tax revenues for the Federal Government. However, current prices are helping Australian households save an average of approximately $700 per year on petrol.*

Outlook for 2016

Dr Oliver believes it is “too early to say that we have reached the bottom for shares.” He also believes that a poor performance in January does not mean that the entire year will be poor and that the chances of a poor 2016 overall are “30-40%.” He expects it to “take a while for central banks to spring into action.” The end result is a projection of short-term volatility with a rising trend at the end of 2016.*

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To learn more or for an obligation-free individual consult, call us today: 1300 787 274.

*AMP Capital, 19 February 2016. Dr Shane Oliver: “Have we reached the bottom?”

The Evolution of Chinese Spending Habits and How it Could Affect Investments

It may not seem important right now but the financial advisors in our Perth office are keeping an eye on Chinese spending habits. Change in Chinese spending habits are affecting a diverse lot of Western companies. Last year, Volkswagen, Nestle, Yum and Proctor & Gamble underperformed due to sales in China being weaker than expected. Meanwhile, Mercedes, Starbucks, Adidas and Nike had sales in China that were stronger than expected.*

Recently, Andy Gardner, who is the Portfolio Manager/Analyst of Fundamental Equities for our parent company, AMP Capital, covered the evolution of Chinese spending on the AMP Capital blog. The article, called “The evolution of the Chinese consumer,” explored the recent change in spending habits among Chinese consumers. We would like to provide an analysis for you.*

Chinese Spending Habits by Financial Advisors

According to Mr Gardner, China is shifting from being a “developing market” to a “mature emerging market” or a “developed market.” In a developing market, good brands that differentiate themselves tend to perform better than brands that don’t differentiate themselves. Due to the mathematics of its massive size, performance in China can have a huge effect on earnings. As Mr Gardner says, “…if your brand starts to perform badly in China, you can expect (it) to be reflected in stock performance.*

What’s Happening in China

Consumers in China have learned how to more accurately assess brand quality, identity and value for their money. The proliferation of smartphones has provided the Chinese consumer with more information. They are now looking for a better quality of life.

Assets that focus on health and wellness continue to exhibit strong growth, while products perceived as “unhealthy” are seeing decreased growth. While bottled water, diapers and yogurt grew, instant noodles, sugary tea and carbonated drinks showed decreased growth.

Call One of Our Financial Advisors in Perth

To learn more or for an individual consult, call us today: 1300 787 274.

*AMP Capital, 19 February 2016. Andy Gardner: “The evolution of the Chinese Consumer.”

How Property Returns are Affected in the Chase for Yield

Among the many financial services we provide to clients in the Perth area is helping to diversify their portfolios. Property investment is one way to diversify. Recently Michael Kingcott, Head of Property Investment Strategy and Research for our parent company, AMP Capital, took a look at how the “chase for yield” is affecting property returns. We would like to provide you with some highlights. (1)

Financial Services - Property Returns

During a period of low interest rates, Australian investors and foreign investors are choosing to invest in commercial real estate. Because yields on bonds tend to be low, investors are searching for a “safe” investment that provides higher yields. Currently, investors searching for a high-yield, low-risk investment are attracted to commercial real estate. (1)

However, yields have compressed during the last decade from a high of 8.7% just before the Global Financial Crisis (GFC) to their current level of 6.6%. Mr Kingcott expects yields to fall even further, matching their 2007 peaks. Some assets may see rates even lower than their 2007 peaks, such as investments with secure high yield, markets with rising prospects for rental growth and trophy assets. (2)

Mr Kingcott is of the opinion that investors will continue to chase yield until other prospects look better to them. This would include rising interest rates, steady momentum for global economic growth and some relief from share market volatility. He feels that the following circumstances will produce from 12-18 more months of yield chase. (1)

Australia has a “tepid” outlook for short-term economic growth. Forecasts from both the Reserve Bank of Australia (RBA) and AMP Capital call for short-term growth in the Gross Domestic Product (GDP) of 2-2.5% per annum. (1)

Real estate prices look more attractive to investors than other asset classes due to less volatility. It is preferred by many investors who are looking for shelter from a high volatility, low growth environment. (1)

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(1) AMP Capital, Michael Kingcott. 19 February 2016. “Chase for yield pushes property returns higher.”
(2) JLL Research, AMP Capital (forecasts).

The “Bear” Facts about Bear Markets

Perth financial planners are responsible for helping their clients navigate the markets during good times and bad times. At Approved Financial Planners, we have a great resource that helps us do just that. His name is Dr Shane Oliver. He is not only the Chief Economist for our parent company AMP Capital; he is also the Head of Investment Strategy and Economics and is responsible for their diversified investment funds. (1)

In mid-February, shares on the ASX 200 index temporarily entered “bear market” status. It is considered a “bear market” when shares declined 20% from their most recent high. For this instance, that “high” took place in April 2015. Media coverage helped generate great concern for this development. Dr Oliver responded with a post in his “Oliver’s Insights” column explaining why bear markets are “not always of the grizzly variety.” (1)

Financial Planners Discuss Bear Market

According to Dr Oliver, it is unfortunate that there is no true definition of what separates a bear market from a correction market. In addition, there is no industry official who is responsible for making that kind of declaration. Dr Oliver prefers to view a correction market as “sharp falls” within a rising market that only last a few months until the market continues its previous trend of rising, reaching a new “high” within 6 months of the low. (1)

In contrast, Dr Oliver prefers to define a bear market as one that sees these falls lasting longer, several months or years, with a profile he calls “a pattern of falling lows and highs,” in which shares don’t return to previous highs for at least a year. He sees the 20% dividing line which currently separates a correction from a bear market as “arbitrary.” (1)

According to the current paradigm, the All Ordinaries index was in a “correction” because it fell 19% but the ASX 200 was in a “bear market” because it fell 20%. (1)

Australian shares have entered “bear market” status 17 times since 1900, for an average of 18 months. The average fall from top to bottom was 33%. It has been an average of 37 months before they rose back to the preceding high, with the exception of the bear market that took place from November 2007 to March 2009, because shares still haven’t reached that previous high. On the average, shares have gained 29% over the first twelve months immediately after the bear market low. (1), (2)

Bear Markets are Not All the Same

Bear markets can be widely divergent. The worst on file was from January 1973 to September 1974, when stocks fell 59%. The cause was a phenomenon known as “stagflation,” consisting of recession and high inflation. The Global Financial Crisis (GFC) from November 2007 to March 2009 saw a drop of 55%. (1), (3)

On the other hand, many bear markets, such as those from February 1994 to February 1995, March 2002 to March 2003 and April 2011 to September 2011, only saw losses of 22%. (1), (3)

What This Could Mean to Investors

According to Dr Oliver, there is a 65% probability that shares will trend upward in the coming year. The main factors in determining whether or not this bear market deepens or relaxes are: whether or not there is a recession in the US or Australia and whether or not there is a “sharp fall in earnings.” (1), (3)

Dr Oliver feels that the US will not have a recession because of a low level of previous excesses and no current monetary tightening. According to many key indicators, Australia currently has growth of 2.5% pa, making a recession here unlikely. According to Dr Oliver, earnings in the resource only comprise 10% of the market and have already “crashed 80% or so,” limiting their ability to affect the market. Meanwhile, recent earnings reports indicate that the other 90% of the market is growing at a rate around 5%. (1)

Call One of Our Perth Financial Planners today

To learn more, call Approved Financial Planners today: 08 6462 0888.

(1)AMP Capital, 18 February 2016. Dr Shane Oliver. Oliver’s Insights: “There’s a bear in there – what drives mild versus deep bear markets.”

(2) Global Financial Data, Bloomberg, AMP Capital

(3) ASX, Global Financial Data, Bloomberg, AMP Capital

Property Leadership Team Prepares for Expanded Role at AMP Capital

When we provide financial advice to our clients in the Perth area, we use every resource we have at our disposal. One of our best resources is the property leadership team of our parent company, AMP Capital.

Recently, AMP Capital announced that they are expanding their property leadership team. Luke Briscoe has been appointed as Managing Director, Office and Industrial. Louise Mason has been appointed as Chief Operating Officer. They will report to Carmel Hourigan, who is the Global Head of Property for AMP Capital.*

Financial Advice Providers Annouces Property Leadership Team Expands

Ms Mason’s role will be to manage the Property business operations, while managing the teams who are responsible for mixed use strategies, business asset creation and office development pipeline. One of her duties will be to deliver premier opportunities for development to clients of AMP Capital, such as Quay Quarter Sydney.*

Mr Briscoe will now assume responsibility for one of the leading industrial and commercial property portfolios in Australia. He will ensure that clients of AMP Capital Office and Industrial continue to receive outstanding investment performance.*

Mr Briscoe has more than 20 years’ experience in the property industry, ranging across property investment disciplines such as asset management, funds management, leasing and agency. This experience has provided Mr Briscoe with strong expertise coming from intimate knowledge of the industrial and office sectors.*

According to Ms Hourigan, these appointments reflect a strong commitment on the part of AMP Capital to create value for their clients.*

Ms Mason has already assumed her new position while Mr Briscoe, who is currently Charter Hall’s Head of Asset Management for Office, will join later in the first quarter of 2016.*

Call Approved Financial Planners in Perth

We applaud the additions of Ms Mason and Mr Briscoe and welcome them aboard. It is people like them who allow us to provide you with the best in financial advice.

To learn more or for an obligation-free personal consult, call Approved Financial Planners today: 08 6462 0888.

*AMP Capital. “AMP Capital expands its Property leadership team.” 29 January 2016.

Outlook for Real Estate Assets in 2016

Perth financial planners who recommend real estate as a way to diversify portfolios are on the right track if a recent AMP Capital blog entry is any indication. The blog post being referenced is called, “Strength in real assets to continue – 2016 outlook.” The article had contributions from AMP Capital’s Heads of Infrastructure Equity, Infrastructure Debt, Global Listed Infrastructure, Property and the Deputy Head of Global Listed Real Estate.*

Perth Financial Planners Discuss 2016 Real Estate Outlook

Generally, the real estate and infrastructure managers of AMP Capital expect global demand to strengthen in 2016 for all of the above listed categories. Here are capsules of each asset class projections for 2016 according to their respective managers.*

Boe Pahari, Global Head of Infrastructure Equity

Mr Pahari expects the markets to be the most active in North America and Western Europe. More managers are expected to launch funds during 2016, making this segment more competitive. Also, larger investors appear to be developing a preference for direct investments in infrastructure assets.*

Andrew Jones, Global Head of Infrastructure Debt

2016 is projected to provide ample opportunities in the infrastructure and senior debt spaces. Sectors projected to develop strong investment opportunity and activity are the US energy sector and assets in transport, energy and utilities on OECD countries.*

Tim Humphreys, Global Head of Global Listed Infrastructure

Demand for global listed infrastructure has been strong over the past decade. That demand is expected to continue throughout 2016. Rate decisions from the US Federal Reserve could have a negative effect, but nobody knows how many further rate hikes there will be.*

Carmel Hourigan, Global Head of Property (Direct Real Estate)

Australian unlisted commercial property is attractive when compared to other asset classes due to high returns. Capital markets will determine the performance of this class in 2016. Melbourne and Sydney office space, along with high quality regional shopping centres, look particularly good.

James Maydew, Deputy Head of Global Listed Real Estate

This market is strong, especially in Europe, but there are other opportunities, too. Office, retail or residential space in the Central Wards of Tokyo, Mid/Downtown Manhattan and London West End look very attractive.

Call Approved Financial Planners in Perth Today

For an individual consult, call us today: 08 6462 0888.

*AMP Capital. “Strength in real assets to continue – 2016 outlook.” 27 January 2016.

What Falling Oil Prices Could Mean to Your Investments

We provide a full menu of financial services in Perth. While we can only provide specific information and recommendations during an individual consult, we do have access to a lot of information we can pass on to consumers. We came across some information we think is relevant to a lot of Perth households: the effects of falling oil prices.

Financial Services Provider Discuss Failling Oil Prices

Recently, in his column “Oliver’s Insights,” Dr Shane Oliver covered the effect of falling oil prices. Dr Oliver is the Chief Economist for our parent company, AMP Capital. He is also the AMP Capital Head of Investment Strategy and Economics. His article was called, “The plunging oil price – why and what it means.” We would like to pass on some of the information to you.*

In two years, oil prices have gone down 70%. This is because supply has surged in comparison to demand and because the US dollar is high. The price could fall as low as $20 per barrel, but Dr Oliver believes the supply will decrease soon.*

Dr Oliver feels that oil producers have suffered from the fall in prices, but that the situation will eventually foster growth. Currently, the average Australian household is spending $14 per week less on petrol than it did two years ago.*

Why Have Oil Prices Fallen?

Dr Oliver attributes falling oil prices to four main factors. Emerging world growth is beginning to level off, lowering demand for oil. Middle East politics also play a role. The re-emergence of Iran has increased supply. Other political factors are more complicated.*

Technology has also played a role as many producers have been able to maintain production even in the face of low oil prices. The rising US dollar has also affected commodities worldwide.*

What Does It Mean to Investors?

Dr Oliver feels that “the negative effects on producers is likely to predominate the positive impact on consumers” in the share markets.

Call Approved Financial Planners in Perth Today

To learn more or for an individual consult, call us today: 08 6462 0888.

*AMP Capital, Dr Shane Oliver. “The plunging oil price – why and what it means.” 28 January 2016.

What Drives the Food and Beverage Sharemarket Sector?

If you are looking for financial planning help in Perth, you may or may not be aware of the many sectors of the sharemarket. Recently, our parent company, AMP Capital, reviewed the food and beverage sector on their website. The article was called, “Part 4 of the ESG Series: Food trends and investor impacts.”

The article was written by Ian Woods, who is the Head of Environmental, Social and Governance (ESG) Investment Research for AMP Capital. He explored some of the industry’s drivers, providing the perspective of an investor. Here are some of the highlights.*

Financial Planning Explores Food and Beverage Industry

Sustainability Drivers in the Food and Beverage Industry

Mr Woods believes that the food and beverage industry is connected to stronger sustainability drivers when compared to other sectors. Here are some of those drivers.*

Asian demographics such as rising income levels and continued population growth.*

Consumer trends such as “healthy living,” affordability and convenience.*

Regulatory changes caused by increased attention to issues such as the environmental and social effects of various food products. Obesity is also garnering increased scrutiny.*

Shrinking natural resources in the face of growing competition: both potable water and arable land are becoming more scarce in many areas of the world.*

Consumers are becoming more and more aware of sustainability and ethical issues. A combination of scrutiny and increasingly complex global supply chains is resulting in a greater demand for stronger supply chain management.*

Climate change: weather trends and patterns affect natural resources and assets.*

What the Obesity Issue Means to Investors

According to Mr Woods, the simplest way to navigate a changing world is to “invest in companies that are changing the world.” According to Mr Woods, investors can avoid buying into the “culprits” and buy into firms which are providing solutions.*

Mr Woods cited that investment firms with high ESG profiles outperform those with lower ESG profiles.

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For an individual consult or to learn more, call us today: 08 6462 0888.

*AMP Capital. Ian Woods. “Part 4 of the ESG Series: Food trends and investor impacts.” 27 January 2016.

Can Chinese Consumer Shifts Affect Your Investment?

Financial planning encompasses a number of factors. The economies of Perth, WA, Australia and the world could play an important role in how your investments perform. Recently, Andy Gardner, the Australian Resources Analyst on the AMP Capital Fundamental Equities team, wrote a post on the AMP Capital blog exploring the connection between Chinese consumer habits and the Australian economy.

The post was called, “The Chinese consumer shift to experience over ‘things.’” We would like to provide you with some of the highlights.

How Chinese Consumer Attitudes can Affect Australia

Mr Gardner sees a connection between changing Chinese consumer attitudes and the Australian economy. For his broad conclusions, Mr Gardner believes that the Chinese and many others across the globe are beginning to value experiences over material products.*

Chinese Consumer Shifts Affect Your Investment With Financial Planning

Mr Gardner sees this trend resulting in a boost for the Australian economy in the tourism, education and housing sectors as Chinese Nationals will be more likely to come to Australia and those who immigrate here will need housing and education.*

According to Mr Gardner, developed markets are trending towards consumers who are spending on experiences which they feel are aligned with their values and lifestyles. This trend is resulting in less money spent on material goods.*

Mr Gardner sees this trend as global. For example, in the US in 2011, revenues for physical products and experiences were almost even. Since then, revenues from experience-based sources are growing at more than twice the rate of those from physical products.*

Why Is This Happening?

Mr Gardner attributes much of this shift to an experience-based generation of millennials becoming the dominant spenders. He also cites that many baby boomers who have retired are spending more time and money on experiences such as eating meals “out.”*

Mr Gardner expects this trend to continue and grow. He sees it as good news for the tourism, property and education sectors.*

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To learn more or for an individual consult, call us today: 08 6462 0888.

Do You Fear a Recession in 2016?

If you fear that there will be a recession in 2016, the financial advisors in our Perth office would like to give you some information that may help allay your fears.

This information comes from Dr Shane Oliver, the Chief Economist for AMP Capital, our parent company. Dr Oliver also serves as AMP Capital’s Head of Investment Strategy and Economics. Recently, Dr Oliver provided an extensive document on the AMP Capital website, filled with predictions and projections for 2016.*

Fear a Recession in 2016 By Financial Advisors

In that article, he covered the chances of recession, both global and in Australia. He rated the chances of global recession in 2016 unlikely, while saying that there will not be a recession in Australia in 2016. We would like to provide you with the points made by Dr Oliver.*

Why Dr Oliver Believes a US or Global Recession is “Unlikely”

According to Dr Oliver, the normal excesses that usually precede recessions, such as overinvestment, massive debt growth or inflation, are not currently present. Another precedent that Dr Oliver hasn’t seen: multiple interest rate hikes or other forms of monetary tightening. Dr Oliver also believes that reduced oil prices “suggest” a “big boost to consumers” during 2016.*

Why Dr Oliver Believes There Will Be No Recession in Australia in 2016

Dr Oliver has observed that low petrol prices and low interest rates are providing household budgets with more money. He has also observed that what he terms the “fall of the Australian Dollar” is removing what he considers to be a “major drag on growth.”*

Dr Oliver is also encouraged that non-mining sectors of the Australian economy are beginning to perform at a higher level. He specified tourism, retailing and higher education as doing well and manufacturing as “likely to see a boost.”*

Talk to One of Our Financial Advisors in Perth Today

To learn more or for an individual consult, call us today: 08 6462 0888.

*AMP Capital, Dr Shane Oliver. “2016 – a list of lists regarding the macro investment outlook.” 21 January 2016.