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Volatile start to the financial year
The All Ords index continued its’ out performance over the other major global indices.
Global index comparison
The buoyant equity market was supportive of capital raising activity resulting in an all-time-high number of new listings. Record numbers of IPOs among SMEs resulted in 284 entities being added to the official list (including debt listings and additional entities listed to stapled groups) in FY07. The new financial year began with 26 floats in July and, notwithstanding the volatile trading conditions, 22 entities floated in August.
The Australian market started FY08 on a very healthy note with the bulls driving the All Ords to a record intra-day high of 6469 on the 13th of July. A great deal of bullish sentiment evaporated when news of hedge fund losses in the sub-prime mortgage market emerged. The subsequent credit market turmoil saw the index sold down to an intra-day low of 5490 on the 16th of August, some 15% shy of record highs. Historical daily volatility surged to a 10-year high since the credit market sell-off began. In the 34 trading days since the 24th of July, 20 have seen daily movements in excess of 1%.
To put this volatility into perspective, on average less than one in six trading days experiences a movement greater than 1% (based on daily movements in the All Ords over the last 10 years).
Source: IRESS. Data as at 7 September 2007.
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