Page three - Australian equities
The Australian equity market has dramatically underperformed most global equity markets this year, up less than 2% in local terms. This lackluster performance can be attributed to weak economic and earnings performance, both on an absolute basis and compared to other countries. Also, there have been several negative micro developments impacting individual large-cap companies that have jolted the confidence of the local retail investor who makes up a meaningful portion of total ownership and turnover. It is unlikely that the macro or corporate environment will improve in the short-term and we expect the Australian market to continue its recent underperformance.