BT Monthly Markets Chart Pack – January 2010

1. BT Monthly Markets Chart Pack – January 2010 An overview of movements in global financial markets

2. Global share markets were weaker in January... • Global share markets got off to a rocky start in 2010 after earnings reports from several US banks failed to meet analysts’ expectations and President Barrack Obama announced plans to clamp down on banks’ risk-taking. In the US, the benchmark S&P 500 Index closed January down 3.7% and this had a negative knock-on effect elsewhere, with markets in Europe (-6.4%), the UK (-4.1%) and Japan (-3.3%) all closing the month lower. • The Australian share market fell sharply in January, with the S&P/ASX 200 Accumulation Index closing the month 6.2% lower amid concerns that China – who initiated moves to curb its bank lending in January – may soon begin to raise interest rates. A poor lead from the US market also contributed to the fall.

3. …but continue to perform well over the long-term, despite some major market events Impact of major market events on global shares since 1987 Jul 01 Tech Wreck Jun 07 US Sub-prime Crisis Sep 01 Attack on Twin Towers Jul 98 Russian Bond Crisis Aug 97 Asian Currency Crisis Nov 89 Fall of the Berlin Wall Feb 94 Bond Market Crash Mar 03 Troops enter Iraq Jan 91 Gulf War Global shares measured by the MSCI World ex-Australia (net dividends) Index in A$. Source: BT Financial Group, MSCI

4. The Australian share market closed 6.2% lower in January S&P/ASX 200 Accumulation Index – year to 31 January 2010 Source: BT Financial Group, Premium Data

5. Key Australian economic news – January • The RBA left interest rates unchanged at just 3.75% following its early February meeting. The decision came as a surprise after a Bloomberg survey of 17 economists showed that all respondents predicted a rise in the official cash rate. • The Westpac/Melbourne Institute’s consumer sentiment survey ended a run of two consecutive monthly declines in January, gaining 5.6% to be 33.6% higher for the year. • The Australian economy added 35,200 jobs in December, sending the local unemployment rate down to just 5.5%. • Housing finance fell 1.6% in December but remains 32.2% higher for the year thanks to the government’s decision to raise the first home owner’s grant. • Consumer prices rose by 0.5% in the December quarter and 2.1% for the year. The result comes after a 1.0% jump in inflation in the September quarter. Source: BT Financial Group

6. The Australian dollar fell for a second consecutive month against the US dollar • The Australian dollar fell against the US dollar (US$) in January, losing 1.4% after stronger-than-expected December quarter growth in the US sparked speculation that the US Federal Reserve will raise interest rates sooner rather than later. • It was the Australian dollar’s second consecutive monthly decline against the US$, though it remains 47% higher against its US counterpart since its low in October 2008. • At the end of January: A$1 bought US$0.8844 -1.4% €0.6383 +1.9% ¥79.83 -4.2% Source: BT Financial Group

7. The Australian dollar versus the US dollar… Currency markets – A$ per US dollar Source: BT Financial Group. Figures at 31 January 2010

8. the Euro… Currency markets – A$ per Euro Source: BT Financial Group. Figures at 31 January 2010

9. and the Yen Currency markets – A$ per Yen Source: BT Financial Group. Figures at 31 January 2010

10. Official world interest rate movements – January • Interest rates in the major economies were again unchanged in January. The Reserve Bank of Australia surprised the market when it decided to leave the official cash rate unchanged at just 3.75% in early February. Source: BT Financial Group

11. Global share market returns 31 January 2010 Source: BT Financial Group

12. Short-term asset class performance 1-year rolling returns to 31 January 2010 (%) Best performing asset class for the year Source: S&P/ASX 200 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Barclays Capital Global Aggregate Bond Index hedged to $A , UBS Bank Bill 0+ years

13. Short-term asset class performance (cont’d) 1-year returns to 31 January 2010 (%) 31 January 2009 31 January 2010 Australian bonds Listed property Australian shares Global bonds Global shares Source: S&P/ASX 200 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, Barclays Capital Global Aggregate Bond Index hedged to $A

14. Long-term asset class performance 31 January 2010 Australian shares Listed property Australian bonds Global shares Cash Note: Accumulated returns based on $1,000 invested in December 1984 Source: S&P/ASX 300 Accumulation Index, MSCI World ex-Australia (net dividends) Index in A$, S&P/ASX 300 Property Index, UBS Composite 0+ years index, UBS Bank Bill 0+ years

15. Oil prices fell amid speculation that China may soon begin to raise interest rates (thus reducing oil demand) Oil prices – US$ per barrel Source: BT Financial Group. West Texas Intermediate oil price at 31 January 2010

16. This presentation has been prepared by BT Financial Group Limited (ABN 63 002 916 458) ‘BT’ and is for general information only.  Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described.  The presentation has been prepared without taking into account any personal objectives, financial situation or needs.  It does not contain and is not to be taken as containing any securities advice or securities recommendation.  Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice.  BT does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation.  Except insofar as liability under any statute cannot be excluded, BT and its directors, employees and consultants do not accept any liability for any error or omission in this presentation or for any resulting loss or damage suffered by the recipient or any other person.  Unless otherwise noted, BT is the source of all charts; and all performance figures are calculated using exit to exit prices and assume reinvestment of income, take into account all fees and charges but exclude the entry fee.  It is important to note that past performance is not a reliable indicator of future performance. This document was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author. For more information, please call BT Customer Relations on 132 135 8:00am to 6:30pm (Sydney time)