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Happy New Year!
In 2008 Locumsgroup continues the refinement of our business model. This involves blending the three business services; Tax and Accounting; Mortgage Finance and Financial Advice. The focus of our efforts is to provide clients with the knowledge and understanding of the role that each of the three divisions play in delivering wealth creation strategies.
By using all three divisions, the power of what can be achieved for our clients is exponential!
How are we doing this?
The development of an improved client contact program, defined by providing relevant information and regular contact with our client base has been finalised. As a result Locumsgroup has established regular client contact initiatives and a dynamic approach to reach each and every client.
I wish you all good fortune and success in 2008!
Paul Ahearne
Managing Director
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Market Commentary - The last 3 months and what's ahead
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Financial Markets - The last 3 months and what's ahead...
Matthew Bohlsen, Senior Financial Adviser Locumsgroup
The second Quarter of the 07/08 financial year saw share markets globally recover in October only to be smashed again in November and ending the quarter generally slightly lower. India was the standout exception with the BSE rising a staggering 25.4% for the quarter. The sub-prime US mortgage crisis and subsequent credit squeeze saw continued massive write downs by the large US investment banks. As a result the cost of borrowing increased, US house prices continued to fall, and the US economy slowed significantly. Analysts now rate the chance of a US recession as 50%.A secondary effect of the increased cost of borrowing and credit squeeze saw Australian Trust Manager, Centro properties badly effected dropping 75% in a day with the Australian LPT sector down 11% in a day, and down again for the quarter. The major takeover talk at present is BHP looking to buy RIO.
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The best performing sectors for the past 3 months were cash and resources, the worst being listed property which fell again around 10%. Against this back drop the Shanghai and Shenzhen bubble deflated somewhat with the CSI 300 down 4.3% for the quarter. US was down 3.8%, Japan was down a massive 9.1% and Australia down 2.4% all on fears of a US recession. As mentioned, India really was a standout story with 25.4% gain for the quarter. World growth slowed, especially USA, Japan and to some degree Europe whilst China and India, as well as the booming Saudi Arabia, stayed strong.
Currencies were generally unchanged over the quarter apart from some strength in the Euro.
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Commodities
World oil prices continued to rise to USD $96 per barrel on concerns of supply disruptions and strong Chinese demand. Other resources prices have softened a bit, in particular Nickel and Copper. Gold strengthened and Uranium has started to pick up again and I expect will be a good future area with nuclear power looking more likely as a solution for the worlds energy along with renewables (see below). Coal is up 48% for the quarter, as it is used for Chinese power stations as well as in blast furnaces to make Iron. Finally Iron ore has gone crazy with spot prices at around USD 190/tonne leading analysts to forecast price rises next year of between 30 and 50% for Iron Ore contracts.
Commentary - Forecast next 6 months
The next 6 months will likely see a further slow down and possible recession in the USA .We will also see a slowing of the 'borrowing to invest' mania of the last few years, which means global liquidity and some asset prices should decrease somewhat.
Most expectations are that the world economy will not be derailed by the USA.
The latest view is that India with its burgeoning middle class will be least affected by a slowdown in world growth and for similar reasons China should be ok. Growth in the Chinese economy is around 12 per cent and India around 10%.A US recession will only cause China and India's GDP to reduce by approximately 2%, still leaving very strong economies. Therefore China, India and the oil rich and commodity nations continue to flourish especially with oil almost at $100/barrel. Saudi Arabia is expected to continue to boom.
We believe this current market downturn provides excellent opportunities to buy into the booming economies of the world at very reasonable prices and a wise strategy is to phase new money into the market over the next 6 months.
2008 will be a year when quality financial advice is of paramount importance.
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Market Commentary - Sub Prime Crisis
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Cause of Sub Prime Crises Identified: NINJAs
by Paul Ahearne, Managing Director Locumsgroup
The US driven sub-prime crisis is moving to contaminate the real economy and bring the US, in an election year, teetering toward a recession. This is the result of loan products that were developed by lenders targeted at borrowers with No Incomes, No Jobs or Assets. NINJAS, as they are referred to by the major banks and lending institutions that targeted these types of borrowers. The result is an increase in the cost of all borrowings as bad debts in the sub-prime market prove unrecoverable and increase the cost of borrowings in the prime market. The extent of the spread (or contagion) has still not yet been quantified as these loans are packaged and on-sold by the original lenders so many times that it is hard to know where they have ended up! The risk is not limited to the US either, as the global nature of economies causes a rippling effect on the Euro-zone, Australia and other regions.
Like every cloud there is a silver lining and reduced prices on shares can present opportunities for investors.
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New products to the market
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Credit Suisse PL100 Emerging Markets Infrastructure Development Trust:
A recent and very successful new product launch was the Macquarie Bank/Credit Suisse Emerging Markets Infrastructure Fund which allowed clients to borrow 100% and gain exposure to the world's most exciting area - Emerging Markets Infrastructure.
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The basket of shares included global titans such as Posco (Korean Steel Maker), Hyundi Heavy (Korean Ship builder), Telefonas De Mexico, and Cia Energetica De Minas Gerais (a Brazilian electricity company). This basket of shares returned 60.88% return last year. The fund has a 5 year term as well as a capital guarantee. Here's what one of our clients thought.
"A huge big thank you - absolutely stoked that my loan has been approved and so excited about what's to come. You're been a brilliant help - can't thank you enough. Look forward to beers on my yacht in five years time... Cheers, Jem"
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If you are interested in future products or would like to review your current investments or superannuation please email info@locumsgroup.com.au.
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Reverse Mortgages:
Over the last 12 months, articles on Reverse Mortgages have abounded in the media. Recognising the need to have such products within our suite of mortgages, Locumgroup identified a number of well priced Reverse Mortgages that were Sequal compliant and most importantly provided Negative Equity protection and the ability to protect a percentage of equity for bequeathing where desired. Recognising the demand for Reverse Mortgages, one of our Senior Lending Managers, Brook Roberts presented at a number of seminars on the subject to increase understanding of how Reverse Mortgages worked.
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Reverse Mortgages, although relatively new to Australia have been in existence in one form or another in the UK and USA for more than 50 years. Addressed at property owners who are over 60, asset rich and income poor. Reverse Mortgages can provide a solution to people who find themselves in this position or, to those who recognise that it is something that they or even their parents may face in years to come. Basically, a Reverse Mortgage enables a home owner with equity, but limited income, to access some of that equity to improve their lifestyle, pay off old debts, fund holidays or cater for oncoming health problems. The amount you can borrow is age driven and is a percentage of the value of your home. It is always emphasised that this is only one of many solutions available and care is taken to make sure that the client discusses the issues carefully with their family, solicitor, financial adviser and Centrelink before proceeding.
We are particularly keen to explore the opportunity that Reverse mortgages present with clients who are over 60 or with clients who have older parents that might fit this category. All consultations are at no cost. All that is required is to give Brook Roberts a call on 02 9255 8821 or email broberts@locumsgroup.com.au.
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Locumsgroup Mortgage Centre
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The Locumsgroup Mortgage Centre
The Mortgage Centre has just celebrated its first birthday! The shop offers a drop in centre for existing clients to transact and being so close to the train and ferry terminals it captures business from local foot traffic. It provides Locumsgroup with a strong retail presence in the CBD. Located on the Ground Floor, 20 Loftus Street (downstairs from the Locumsgroup main office on level 3), the shop has given a breath of fresh air to Loftus Street!
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Locumsgroup Mortgage Managers are brokers as well as lenders and this means that whatever new loan product is in the marketplace Locumsgroup have it covered and can explain how it may best suit your needs. Loan products are constantly evolving and as your situation changes it is important to have an understanding of what is on offer. Our mortgage managers' keep their finger on the pulse' with new products and are more than happy to discuss or explain any particular questions you may have. Call 1800 24 86 86 or email mortgage@locumsgroup.com.au.
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Our Panel Lenders
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Anyone that becomes a new client to any one of our divisions, Financial Advice; Accounting; or Mortgages, during the months of January and February will receive a $100 Myer Gift Voucher
To take advantage of this special offer please contact Larissa Barton 02 9255 8820 or email lbarton@locumsgroup.com.au to schedule your appointment.
Conditions apply: a new client to a division is one that has not transacted with that division on any prior occasion, voucher is issued on settlement/invoice date and you must mention this offer to claim your voucher.
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How to get buyers to pay more for your property!
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The no. 1 property stylists™ launch their new website!
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Instant Interiors, The team of interior designers that re-invent your property, to inspire buyers to pay a premium price, or just to enhance your living space for the 'ultimate' styled home.
Enjoy the visual tour of the Gallery's in our STYLE section and review our varied SERVICES which should be of interest to you.
Being a 'Locumsgroup' client enables you to a 20% reduction in our Residential Home Styling Consultancy rate, prior to the end of June 2008!
www.instantinteriors.com.au
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Note to the reader:
The Locumsgroup message is sent to you as either a client or someone who is interested in our products and services. We are against the sending
of unsolicited mail. If you have received this email in error, or would like to unsubscribe, please click here and simply click "send".
Information contained in this message is of a general nature only and does not constitute formal advice. Everyone's financial situation and lifestyle
is unique and we recommend you contact your financial adviser prior to making investment decisions. Locumsgroup does not accept responsibility
for any inaccuracies or errors that may appear in this publication.
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