It has been a rough start to 2016. Last week we saw falls across global sharemarkets with Chinese shares down 7%, the US market dropping by 1.5% and European shares falling by 3%.

There are a combination of factors driving the recent sell-off including rising tensions between Iran and Saudi Arabia, softer than expected manufacturing data in the US and worries over the Chinese economic growth outlook.

To put these developments into context please click here to view the current AMP Market Watch update which addresses these areas in more detail.

Key points to note in the attached analysis include:

• A condensed combination of unexpected events in China, the Middle East and North Korea prompted sharp sell-offs in share markets.
• Shares often go through rough patches; selling after falls just turns a paper loss into a real loss; market falls throw up opportunities; and dividends remain more attractive and more stable than bank interest.
• Overall, while it’s been a very poor start to the year for equity markets and risks remain high in the short term, the expectation remains for better returns this year than we saw in 2015 as share market valuations are reasonably cheap relative to bonds and bank deposits, global monetary conditions are likely to remain very easy and this should in turn help ensure a rising trend in share markets, albeit with bouts of volatility along the way.

For more information regarding this or any other matter, please don’t hesitate to contact Hamish or Ben on (08) 8122 1688.