Newsletter - Austock Group

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Newsletter - Austock Group

Austock GroupNewsletterIssue 39 – Monday 25 October 2010SECURITIES | CORPORATE | LIFE | PROPERTY


On the economic front in Australia we have the ProducerPrice Index on Monday business confidence figures onTuesday, Consumer Price Index on Wednesday and newhome sales figures on Friday.Should the Consumer Price Index show a rise of closeto 1% for the quarter this would make it almost certainthat official interest rates will increase on Cup Day. Anincrease closer to 0.5% would probably cause the Bankto defer any interest rates move until next year.But irrespective of whether rates are in fact increasedon Melbourne Cup day it would seem fairly clear that bythis time next year interest rates will probably be about5.5% or 6%. However given the increasing stridency ofcomments by our major trading banks, and irrespectiveof what the Reserve Bank does, the banks will increasetheir own interest rates for borrowers. The banks claimthat this is due to the banks themselves facing higherfunding costs.In the US there is a large range of important dataavailable which are likely to show that its economyseems to be showing a “hesitating improvement”.Information which may confirm this judgement is theChicago National Activity data on Monday, existing homesales on Tuesday, durable goods order on Wednesday,and on Friday the very important indicator of industrialactivity across the United States, with the ChicagoPurchasing Managers reportIn conclusion, and as has been stated in this columnin recent times, the market is continuing to advancein a “two step forward one step backward” direction.Furthermore there seems to be no reason to change myexpectation that by the end of this year the ASX 200should be approaching 5000 points, which means abouta 10% rise over the remainder of this year- a difficult, butnot insurmountable task!Michael Heffernan, Austock SecuritiesForecastsChris CatonBT FinancialNeville NormanUniversity of MelbourneSteven KeenUniversity of Western SydneyBill EvansWestpac BankMichael HeffernanAustock SecuritiesASX 200INDEXDec 2010ASX 200INDEXJun 2011GDP %Annual Growth2010Reserve BankCash RateDec 2010$A/$USDec 2010CPI AnnualGrowthDec 2010UnemploymentRateDec 20104750* 5500 3.0 4.75 82 3.4 5.05100 5500 2.4 5.25 89.5 3.5 5.84000 4000 2.2 4.00 75 N/A 6.04750 5000 3.0 5.00 90 3.3 4.95000** 5600 2.8 4.50 85 3.2 5.5Age Consensus 4832 4939 2.8 4.75 89.5 3.0 5.2Source: The Age 3 July 2010* Revised 13 Sept 2010 from 5250** Revised 11 Sept 2010 from 5200Key DataLatest Level% move over yearGDP $1242bn June Quarter Annualised +3.3%CPI 172.1 June Quarter +3.1%ASX 200 Index 4648 22 October 2010 -4.3%Unemployment rate 5.1% September 2010 5.7% level September 200990 Bank Bill Rate 4.77 22 October 2010 3.87% level 22 October 200933


Austock Group Limitedwww.austock.cominfo@austock.com1800 806 362 (Toll Free)Melbourne OfficeLevel 12, 15 William StreetMelbourne VIC 3000Phone: 61 3 8601 2000Fax: 61 3 9200 2270Sydney OfficeLevel 9, 56 Pitt StreetSydney NSW 2000Phone: 61 2 9233 9600Fax: 61 2 9251 9368DisclaimerRisk RatingAustock Securities Limited has a four tierRisk Rating System consisting of: Very High,High, Medium and Low. The Risk Rating isa subjective rating based on: ManagementTrack Record, Forecasting Risk, IndustryRisk and Financial Risk including cash flowanalysis.Important NoticeThis publication contains a summary onlyof our research reports on the subjectcompanies. It has been prepared for yourconvenience only and should not be used asthe basis of an investment decision. Pleasecontact your adviser to obtain a copy of thefull research report on each company.Disclosure of Economic InterestsThe views expressed in this publicationinclude the personal views of a number ofAustock research analysts. Some analystshold securities of the subject companies orderivatives. Please refer to the full researchreports for disclosure of any economicinterests held by the author of the report.Disclaimer/DisclosureThis publication has been prepared solely forthe information of the particular person towhom it was supplied by Austock SecuritiesLimited (“Austock”) AFSL 244410. Thispublication contains general financial productadvice. In preparing the advice, Austockhas not taken into account the investmentobjectives, financial situation and particularneeds of any particular person. Beforemaking an investment decision on the basisof this advice, you need to consider, with orwithout the assistance of an adviser, whetherthe advice in this publication is appropriatein light of your particular investment needs,objectives and financial situation. Austockand its associates within the meaning of theCorporations Act may hold securities in thecompanies referred to in this publication.Austock believes that the advice andinformation herein is accurate and reliable,but no warranties of accuracy, reliabilityor completeness are given (except insofaras liability under any statute cannot beexcluded). No responsibility for any errors oromissions or any negligence is accepted byAustock or any of its directors, employeesor agents. This publication must not tobe distributed to retail investors outside ofAustralia. Austock Life Limited (Austock Life)AFSL 225048 is the issuer of ImputationBonds. The Product Disclosure Statementshould be considered in deciding whether toacquire, or continue to hold, the product.Disclosure of Corporate InvolvementAustock Securities Limited has not in theprevious 12 months been involved in apublicly-announced transaction involvingthe payment of a fee to Austock SecuritiesLimited by the corporate issuer describedin this report. Austock Securities doesand seeks to do business with companiescovered in its research.Austock Life DisclaimerThese information has been producedby Austock Life Limited AFSL 225408(Austock Life, we) and is based upon ageneral understanding of Australian taxationlaws and other applicable legislation, rulesand guidelines applicable at the time ofproduction. Whilst, Austock Life believesthis information is correct and the casestudies and opinions have been made upona reasonable basis, we do not warrant theaccuracy of any material in this documentand to the fullest extent permitted by law,disclaim all responsibility for any loss ordamage which may be suffered by anyperson directly or indirectly, through relyingon this information or any aspect of it,whether that loss or damage is caused bythe fault, negligence or omission of AustockLife or otherwise. This material providesinformation only, and does not take intoaccount any particular person's objectives,financial situation or needs. Before actingon it Austock Life recommends investorsconsider its appropriateness having regardto their own situation, and also seek thehelp of an adviser. None of Austock Life,nor its parent entity, Austock Group LimitedABN 90 087 334 370, make any guarantee,warranty or representation as to the accuracyor completeness of the general advice andinformation contained in this document, andyou should not rely on it. No responsibility forany errors or omissions or any negligence isaccepted by Austock Life or Austock GroupLimited. The Product Disclosure Statementshould be considered in deciding whetherto acquire, or continue to hold ImputationBonds.We value your commentsand suggestions, pleaseforward these to:newsletter@austock.com5

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