Super returns to reach double-digit growth for 2009-10: Economy Roundup

Australian superannuation returns are set to record double-digit growth during the current financial year, resulting in five double-digit returns within the last seven financial years, according to the latest results from Super Ratings.

The firm’s latest data shows that for the month of March 2010, the average super return saw growth of 2.9% with a result of 13.95% growth for the financial year ending March 31.

“The Australian sharemarket continues to be the driving force, with the SR50 Australian Shares Index returning 5.22% in March and 38.92% for the past year,” managing director Jeff Bresnahan said in a statement.

“In addition to the strong sharemarkets, many super funds have clearly enjoyed additional benefits as the median balanced option increased its exposure to the Australian sharemarket from 29.3% at the beginning of the recovery in March 2009, to a current exposure of 30.5%, thus creating a dual benefit for many Australians.”

Over the past five years to March 31, the best-performing balanced investment fund has been OSF Super with a return of 7% per annum, followed by Buss(Q) at 6.6% and NGS Super at 6.4%.

Australian economic activity is set to continue with strong growth over the rest of the year, the latest Westpac-Melbourne Institute Leading Index has revealed.

The index, which indicates the likely pace of economic activity within the next three to nine months, has recorded its fastest annualised growth rate since 1997 at 7.2% in February, above the long-term trend of 2.8%.

“The growth rate in the index has continued to build. Over the last six months that growth rate has accelerated from 2% which was well below trend growth of 2.8% to 7.2%,” Westpac chief economist Bill Evans said in a statement.

“The Index is indicating that the risk profile for growth is now tilted firmly in the upward direction.”

Evens said in a statement the solid pace of the index has been supported by strong commodity prices and a slightly uptick in industrial production in the US. With regards to the Reserve Bank, he said more interest rates are on the rise as the economy continues its growing streak.

“We expect that the Bank is likely to tighten again in May or June at the very latest, restoring rates to “normal” before pausing to assess the interaction of the boost to incomes from the commodity boom and the offsetting effect of rate hikes and an unusually cautious consumer on the growth outlook,” he said.

Collapsed retailer Living Edge receives offer

Meanwhile, the receivers and managers of Living Edge have announced the receipt of a non-binding offer from major supplier Herman Miller.

The offer suggests an acquisition of the business by the end of the month, including existing customer contracts. The non-binding offer signifies “commitment to both existing and prospective customers in the Australian market and the architectural and design community”.

Living Edge’s receivers said it was pleased to receive the offer, but that it will continue to examine “interest from other parties in parallel and on an accelerated basis”.

The Australian sharemarket has continued to gain ground following strong leads on Wall Street, where investors have gained optimism from tech stocks following the shock of seeing Goldman Sachs slammed with fraud charges.

The benchmark S&P/ASX200 index was 41 points or 0.84% to 4967.3 at 12.00 AEST, with the Australian dollar also gaining ground to US93c as investors moved into commodity-heavy currencies overnight.

Commonwealth Bank shares gained 1.1% to $59.92, as NAB lost 0.8% to $28.61. Westpac rose 1.3% to $28.21 as ANZ shares gained 0.8% to $25.33.

Steel manufacturer OneSteel has not opened its Whyalla blast furnace following a closure over the weekend, but has said it expects a return to regular operations within a month.

“OneSteel expects minimal impact on its ability to meet expected customer demand across the majority of its products and customers. Additionally, some product will be imported to supplement product where required,” the company said in a statement.

NAB has said it is currently considering possibilities following a decision by the Australian Competition and Consumer Commission to block its $14 billion takeover bid for AXA Asia Pacific Holding’s Australian and New Zealand businesses.

“NAB is disappointed with the decision given the extensive consultation NAB undertook with the ACCC as part of the review process,” the bank said in a statement. The ACCC said on Monday the proposed merger would result in less competition in the market for investment platforms.

As reported by South Korean publication Yonhap Infomax, ANZ is currently considering purchasing a stake in Korea Exchange Bank for $4 billion.

Two sources have also told Reuters that ANZ, the smallest of the big four, is currently the only investors that have responded to letters sent to potential buyers by equity group Lone Star.

Australia Post to restructure

Australia Post chief executive Ahmed Fahour has revealed a five-year restructuring plan for the organisation which will see it utilise growth internet usage. The “Future Ready” program will divide Australia Post into four separate divisions.

Fahour said in a statement he believes growth in online retailing could offset the losses in traditional mail postage. “While the internet is the letter business’s worst enemy, it is the parcel business’s best friend,” he said.

Belgian group Nyrstar, currently bidding for CBH Resources, has completed due diligence on its target and has said it will not offer a proposed takeover offer for the company.

Nyrstar is offering 19.5 cents per share. Meanwhile, Japanese group Toho Zinc has raised its own bid to 30 cents per share.

In the United States, the Republican Party has backed down in its opposition to president Barack Obama’s financial reform bill. Senate Banking Committee chairman Chris Dodd has said there is agreement on 80-90% of the bill’s content.

Additionally, Senate Republican leader Mitch McConnell has said that “”We are all optimistic that this can be fixed”. The Democrats are looking for at least one Republican vote in the Senate to have it passed as quickly as possible, despite the Senate’s 41 Republicans signalling opposition to the bill last week.

On Wall Street, investors have gained optimism from Apple’s good financial results, announcing a 90% rise in profit. The Dow Jones Industrial Average gained 25.01 points or 0.23% to 11,117.06.