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2012

2012. “Australia – are we digging a hole for ourselves?”. Disclaimer. This presentation is for financial adviser use only – it is not to be distributed to clients .

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2012

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  1. 2012 “Australia – are we digging a hole for ourselves?”

  2. Disclaimer • This presentation is for financial adviser use only – it is not to be distributed to clients. • Issued by IOOF Investment Management Limited (IIML), ABN 53 006 695 021, AFSL 230524. IIML is a company within the IOOF group of companies, consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. • Examples are for illustrative purposes only. • Past performance is not a reliable indicator of future performance.

  3. The rise of resources

  4. Resources dominate EPS growth Earnings growth 2002-2012 EPS growth (pa) Industrials Financials Consumer (Staples) Resources Telecoms Energy Utilities Healthcare Consumer (Discretionary) Source: Bloomberg

  5. Change can be rapid Australian share market composition Resources Resources Telecoms Everything else Source: Legg Mason/ASX/IOOF

  6. Resources have dominated… but for how much longer?

  7. Resource market outlook Strong analyst forecast for resource earnings Resources EPS (based to 100) Financials May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2011 2012 2013 2014 2015 PROJECTED Source: Bloomberg

  8. Resource market outlook Historical P/E near long-term average Average P/E Resources Actual P/E Resources 2001 2003 2005 2007 2009 2011 Source: Bloomberg

  9. China GDP forecast to slow GDP growth (%) High Median Low PROJECTED 1998 2000 2002 2004 2006 2008 2010 2012 13 14 Source: Bloomberg

  10. Massive increase in iron ore supply Seaborne iron ore exports Australia Brazil Rest of world Million metric tonnes 2001 2003 2005 2007 2009 2011 Source: Bloomberg

  11. New iron ore projects Port Hedland Significant increases in supply ahead Geraldton Kalgoorlie Perth

  12. No growth in iron ore price Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Q2 Q3 Q4 2013 2014 2009 2010 2011 2012 Analyst forecast Futures prices PROJECTED Iron ore price Source: Bloomberg

  13. Slower resource growth Annual earnings growth (pa) Last 10 years Next 3 years Beyond 2015 Phenomenal resource growth coming to an end ? ? Source: Bloomberg

  14. Positioning portfolios post-boom

  15. Watch for long-term trends Telstra BHP 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Bloomberg

  16. Watch for long-term trends Telstra BHP 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Bloomberg

  17. The world is getting older Under 15 (US) Over 65 (US) 2015 1980 1985 1990 1995 2000 2005 2010 Source: Bloomberg

  18. The world is getting older Under 15 (US) Under 15 (China) Over 65 (US) Over 65 (China) 2015 1980 1985 1990 1995 2000 2005 2010 Source: Bloomberg

  19. The world is getting older Over 65 (Japan) % Population Under 15 (Japan) 2015 1980 1985 1990 1995 2000 2005 2010 Source: Bloomberg

  20. Healthcare under-represented Room for growth in Australian healthcare Healthcare Source: Bloomberg

  21. Opportunities in healthcare • 20 billion • 18 billion • 16 billion • 14 billion • 12 billion • 10 billion • 8 billion • 6 billion • 4 billion • 2 billion 9,400% Australian health stocks can be winners 339% 3,675% Source: Bloomberg

  22. The next ten years won’t look likethe last ten years • What are the implications for public policy? • How do we manage this transition as investors? • Look for emerging sources of EPS growth • Employ active management to capture valuefrom emerging trends “Australia – are we digging a hole for ourselves?” IOOFadviserbriefing 2012

  23. 2012

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