Super funds hit by falls

THE unprecedented four-year dream run of the Australian sharemarket appears to be over, with another big sell-off yesterday pushing losses over the past month to $150 billion, or more than 10 per cent. Spooked by growing financial turmoil in the United States, investors savaged the shares of some of Australia's best-known companies, pushing the market to its lowest point since March. Markets across Asia and Europe have also been battered, prompting fears of further declines and a growing conviction among analysts that the long shares boom could be over. If sustained, the market rout will deliver an unfamiliar dose of red ink for millions of Australians with money in superannuation funds, which are heavily exposed to local and overseas shares. After successive years of spectacular gains, super funds are now looking at the real prospect of negative returns. Market analysts are blaming the drop on investors taking fright at the upheaval in the US, where high-risk lending practices and falling home prices have combined to create a growing sense of crisis. Macquarie Bank's head of equity strategy, Neale Goldston-Morris, predicted the Australian sharemarket would fall further, with prices not recovering until the middle of next year. Yesterday's 3 per cent drop on the S&P/ASX200 index dragged the market to its lowest point since March 14. Until a month ago, Australian shares had not dropped more than 2.7 per cent in a day since the September 11, 2001, terrorist attacks.
BHP and Macquarie Bank — two companies whose shares are widely held by small investors — were among the worst hit in yesterday's sell-off. Macquarie shares were stripped of more than 5 per cent of their value to close down $3.55 at $66.68. BHP slumped $1.86, or 5.3 per cent, to close trading at $33.20. Shares in RAMS Home Loans Group, which were savaged on Tuesday by revelations that the company's profits would be hit by the global crisis, lost another six cents to close at $1.35.Intersuisse director of equities Andrew Sekely said the RAMS statement may have sparked the panic selling. "The problems that have been mostly in the US up until now have suddenly come to Australia," he said. "That's made people a bit frightened as to what the further ramifications might be." There are fears that the crisis in the US surrounding the so-called sub-prime mortgages could have a major impact on the US economy and, by extension, global economic growth. But the damage to the Australian sharemarket has frustrated some market watchers, who point to the strong performance of Australian companies, low inflation and continued economic growth. Commonwealth Bank shares fell 1.85 per cent yesterday, despite the bank reporting a 14 per cent profit rise and a higher dividend. "Investor fear is driving this now, not fundamentals," said Bell Potter Securities research director Peter Quinton. By falling more than 10 per cent, the market is said to have experienced a "correction" — meaning investors have substantially revalued it and the change is more significant than the usual, daily fluctuations.Citi Investment Research director Graham Harman said that while the correction did not necessarily mean the bull market was over, the bull was ageing. The market would recover as long as inflation remained low and companies continued recording big profits. "If inflation really gets out of the bottle, this bull market has got a problem — and this is separate to the sub-prime problem," he said.
So, why have I posted this on my blog? easy, to mark this event as a historic marker recorded. Reason? because I have known that the us's economy will fail and fall drastically and I just wanted to note the date of this beginning and how stupid sheeple are when they don't see just how different we are to 'us' and how we (Aus) can continue being abundant and prosperous without the 'us'