Markets chartpack April 2007

What correction? The China fall…  The Shanghai composite index fell almost 9% on Tuesday 27 th Feb 2007 and weighed on sharemarkets around the globe.  Markets are now almost back to their earlier peaks, with some (including China) even higher.  In late March, the US market had its best week in four years. “…in my opinion, share markets around the world had become over- valued, or at least fully valued. Overvalued markets can remain that way for a long time, but they are vulnerable to shocks, and the 9% fall in the China market was just such a shock.” Source: BT Financial Group Chief Economist Chris Caton

 Our local currency has hit decade highs against the US dollar recently. During March it rose: 2.53% against the US dollar 1.74% against the Euro 2.17% against the Yen Australian dollar strengthens

 In recent years, when the $A has risen, it is usually because the US dollar has fallen.  Forecasts that the $A is headed for 85 US cents really embody a view that the US dollar will fall by a further 5%. I think this unlikely.  A strong currency affects the profitability of Australian companies that compete with imports, that export, or that earn profits offshore. Australian dollar strengthens (cont.) Source: BT Financial Group Chief Economist Chris Caton

Currency markets – $A per $US Source: BT Financial Group. Figures as at 31 March 2007.

Currency markets – $A per Euro Source: BT Financial Group. Figures as at 31 March 2007.

Currency markets – $A per Yen Source: BT Financial Group. Figures as at 31 March 2007.

Global indices 1 year (%)3 years (% pa)5 years (% pa) US (S&P 500) US Tech (Nasdaq) Japan (Nikkei) HK (Hang Sang) Germany (DAX) France (CAC) Australia S&P/ASX Small companies Resources Listed Property Source: BT Financial Group. Figures as at 31 March 2007.

Asset class performance Source: S&P/ASX 300 Acc Index, MSCI World ex Aust (net divs) Index in $A, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in AUD

Long-term asset class performance Source: S&P/ASX 300 Acc Index, MSCI World ex Aust (net divs) Index in $A, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in AUD

Best performing asset class highlighted in red Asset class performance

Source: S&P/ASX 300 Acc Index, MSCI World ex Aust (net divs) Index in $A, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Citigroup World Government Bond, Unhedged in AUD Asset class performance

Oil prices (US$ per barrel) Source: BT Financial Group. West Texas Intermediate as at 31 March 2007.

Official world interest rates Current rateLast moveDirection of last move Australia6.25%November 2006  US5.25%June 2006  Japan0.50%February 2007  UK5.25%January 2007  Source: BT Financial Group.

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