Craig James, Chief Economist, @CommSecJuly 2015

2015/16: New Year, New Opportunities

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Important InformationThis presentation has been prepared without taking account of the objectives,

financial situation or needs of any particular individual. Before acting on the

information in this seminar, you should consider its appropriateness to your

circumstances and, if necessary, seek appropriate professional advice.

Commonwealth Securities Limited ABN 60 067 254 399

AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of

Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the

ASX Group.

Examples used in this presentation are for illustrative purposes only.

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…but first….Economic growth 2.75-3.25%

in 2013/142.75-3.00%in 2014/15

Inflation 2.50-3.00%end 2014

2.50-3.00%mid 2015

Unemployment 5.50%-6.00%, end 2014

5.50-6.00%,mid 2015

Cash rate 2.50-2.75%, end 2014

2.75-3.25%,mid 2015

Sharemarket (All Ords)

5,700 points, end 2014

6,100 points,mid 2015

Australian dollar US97cend 2014

US95cmid 2015

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World economy OK

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Australia

In Short Could do better

So What? Job market risks Inflation to stay low Rates to stay low Weaker currency?

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Light in tunnel for business? So What? Multiplier benefits; Policy implications

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Australia“Despite the doom and gloom and fulminations over the airwaves, in newspapers and in cyberspace, business confidence has risen in recent months.”“Perhaps we might be allowed to conclude that we have been meeting some of our challenges, thus far, with outcomes that, while not perfect, are not too bad.”

Reserve Bank Governor, July 22

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Still spending

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More homes being built

In Short Firm housing market

So What? Positive for building

trades Positive for retailers Need to follow cycle

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Job market to improve?

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Inflation contained

In Short Headline inflation

1.5% Underlying inflation

2.3%

So What? Rates can stay low Pressure on margins Need to keep costs

low

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Rising wealth

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Interest Rates

In Short Cash rate to stay

low

So What? Tough for

investors Forecasters

divided Economy in

focus Inflation is key

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Investments

In Short Challenges for

shares

So What? Diversification Low cash

continues Mixed prospects

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Exchange rates

In Short Much depends on

US

So What? Impact on travellers Impact on costs Impact on

consumers Boost for business

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Outlook

FORECASTSmid 2016end 2015

2.50-3.00%2.25-2.75%Economic Growth2.50-3.00%2.25-2.75%Underlying inflation5.50-6.00%5.75-6.25%Unemployment

mid 2016end 20151.75-2.00%1.75-2.00%Cash rate6,000-6,2005,800-6,000Sharemarket (All Ords)US68-73cUS69-74cAustralian dollar