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The Importance Of Global Diversification:Australian Case Study

Which Is The Most Resilient Economy On The Planet?

Proof Of Australia’s World Record Resilience

*The highest amongst major advanced economies

My Aims For This Presentation

Our clients use LM as their trusted partner

to access this Australian story

Our clients use LM as their trusted partner

to access this Australian story

To provide an example of the type of geographical

diversification ALL investors should have

in their portfolios

To provide an example of the type of geographical

diversification ALL investors should have

in their portfolios

To present a compelling case study on the

economic credentials of an investment destination

you probably don’t know much about

To present a compelling case study on the

economic credentials of an investment destination

you probably don’t know much about

As you will have gathered the

country in focus is Australia.

As you will have gathered the

country in focus is Australia.

Plotting The Shifting GDP Centre Of The World

On The Doorstep Of This Century’s Global Economic Powerhouse

• But it will be a bumpy economic ride in the developing nations!

Australia Is A Critical Partner for Growth in Asia – Export Values

Of Australia’s top 12 export of goods and services markets in 2011, ten were from Asia.

Australia’s Merchandise Exports by Country

“The tyranny of

distance, so long

Australia’s enduring

curse, has been

turned on its head. It

is now the Antipodean

advantage of

adjacency”

Source: The Economist & Australian

Survey 26 May 2011

Providing Commodities To Asia Is Just One Part Of The Story > Asia is rapidly becoming home to the majority of the world’s middle

class:

> Middle class demand a diverse range of goods and services from:• Health and aged care • Education• Household goods• Tourism

> Australia as the most sophisticated economy in the region fulfils these needs

• Banking and financial services• Agriculture and high-quality food products• Manufacturing/services: high-value &

innovative• Green Technology

Australia’s GDP >US$1.5 trillion – 4th Largest Economy In Asia

• Australia’s population is less than half a per cent of the global total

Real Average GDP Growth by Economic Grouping

GDP Per Capita (USD)

GD

P P

er C

apit

a (U

SD

)

> Highest median wealth USD 222k (USA 53k)

> 2nd highest average wealth USD 397k after SwitzerlandSource: Credit Suisse Global Wealth Report, October 2011

Global Government Net Debt 2012

Active Monetary Policy Room With Room To Manoeuvre

Australian Economy Myth 1 China slow down a grave risk to Australian economy

The impact of a worst case Chinese ‘hard landing’ (a 4.00% slowdown) on the Australia economy would be to shave off 0.50% of GDP which would only reduce the current IMF annual forecast to 3.00% growth. This is still the trend rate.

The Economist, 25 August 2012.

Australian Economy Myth 2 World‘s 12th largest 1.5 Trillion USD economy dependant on mining?

• Australia’s services sectors account for over 80 per cent of real Gross Value Added (GVA).

Australian Economy Myth 2 World 12th largest 1.5 Trillion USD economy dependant on mining?

Index of Economic Freedom World Ranking – 2012

Key Indicators of Doing Business – 2012

Australia’s Labour Force by Birthplace

Population Growth 1.5% p.a.

>Natural increase 50%

>Migration Policy 50%

The Economist’s Liveability Index Ranking – 2012

4th largest fund management AUM globally at >1.5 trillion AUD

3rd largest banking sector by market cap behind US & China (bigger than combined

Eurozone)

Compulsory Superannuation – 9% from employer

4 of the 9 top rated global banks (AA-) with no bail

outs

AAA Sovereign

Rating

Australian Solidity

Largest Stock Market in Ex-Japan Asia By Market Cap

Best Stock Market Performance Over The Last 112 Years Averaging 7.20%pa after inflation

Asset Class Return Since 1 January 1990

Australian Shares 8.80%pa

International Shares 4.00%pa

US Shares 7.10%pa

Best Stock Market Performance Over The Last 112 Years Averaging 7.20%pa after inflation

Asset Class Return Since 1 January 2000

Australian Shares 7.00%pa

International Shares -3.20%pa

US Shares -2.80%pa

Best Stock Market Performance Over The Last 112 Years Averaging 7.20%pa after inflation

Asset Class Return Since 1 January 2006

Australian Shares 3.10%pa

International Shares -3.80%pa

US Shares -2.70%pa

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In Summary

Australia is in the right place at the right time. Skilful economic

management has maximised the nation’s opportunities and in doing so

has created the world’s most resilient economy which has been the

most consistent performer on the planet for over 20 years. Australia’s

growth is forecast to be number 1 for developed economies over the

foreseeable future. As an investment destination there are arguably

none better.

Australia is in the right place at the right time. Skilful economic

management has maximised the nation’s opportunities and in doing so

has created the world’s most resilient economy which has been the

most consistent performer on the planet for over 20 years. Australia’s

growth is forecast to be number 1 for developed economies over the

foreseeable future. As an investment destination there are arguably

none better.

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