To use a sporting term, 2012 was a year of two halves for equity markets in Australia. "Risk on" dominated for much of the year as Europe and the Euro threatened to unravel courtesy of debt levels in Greece, Spain, Italy and Portugal. For much of the year the jury was also out seeking clarity on the prospects of a hard or soft landing in China, with iron ore and coal prices suffering accordingly.
However as the second half proceeded risk averse investors were reassured by the ECB "whatever it takes" policy. At the same time, with the Fed continuing to crank the monetary presses, the US economy showed tentative signs of life, and initial jobless claims continued to fall - albeit frustratingly slowly. In time (just) the Fiscal Cliff was averted, and by the end of the year it seemed that China was not only avoiding a hard landing, but resuming growth.
Australia's equity market also alternated between risk on and risk off, only partly in response to these global influences. What seems difficult to reconcile is that in this environment of fluctuating risk the ASX200 Accumulation Index only suffered one negative month in 2012.
To read the entire report by Chris Gosselin, please click here.
Attached Files:
2012 Performance Review (pdf format)
