Your Finance Update- March Summary

22 March 2023

Is this a bear market rally or are we off to the races?

The start of 2023 has been generally positive for markets. While the rally has been a welcome relief from the tumultuous market environment in 2022, the key question is whether the recent rally has legs or whether it is simply a bear market rally with more volatility to follow as we progress into 2023.

The market has been skittish over the past 12 months with any positive news on the inflation front, such as any sign that inflation is moderating, resulting in the market rallying. While the most recent rally has partially been driven by some evidence that we are closer to reaching peak inflation, we have also seen liquidity pumped into the market which has no doubt supported market returns. Central banks have been generally decreasing their balance sheets with key central banks such as the US Federal Reserve moving from a quantitative easing policy to a quantitative tightening policy.  This has reduced the overall liquidity that’s supporting markets. However, we have also seen some central banks, notably the Bank of Japan (BoJ) and the People’s Bank of China (PBOC), add liquidity to markets in recent months, which markets have liked. We do not believe that this trend is structural and that the direction of inflation and potential impact on economic growth will be the key driver of markets as we progress throughout 2023.

Our base case remains that the third quarter of 2023 will be ‘d-day’ for markets as the direction which company earnings will take, due to the impact of higher interest rates, will be clearer. The most recent company reporting season suggests that there is evidence of slowing in demand, however this is not consistent across all sectors and companies.

Overall, we believe that market returns may trend sideways for the full year with a possible downturn later in the year. In such an environment being able to pick out the ‘winners’ from the ‘losers’ will be increasingly important as simply riding the broader market to generate returns will be more challenging.


Market Developments during February 2023

Australian Equities

February saw the S&P/ASX 200 Accumulation Index finish negatively after its strongest month on record in January. The main driver of the negative performance was the persistently high CPI figures in the US and the evaluation of earnings season in the Australian market. Utilities (+3.4%) and Information Technology (+2.7%) were the top performers, whilst the Materials (-6.6%) and Financials (-3.1%) sectors were the biggest laggards in the month.


The Utilities and Information Technology sectors led all sectors as several companies reported robust earnings or positive corporate actions (i.e., Origin Energy). In contrast, the Materials and Financials sectors were the worst performers as concerns around the global macroeconomic outlook and policy response, coupled with the evaluation of earnings reports resulted in selloffs within these sectors.

Investors continued to grapple with the inflation-driven interest rate outlook facing central banks globally and the implications that this may have on the future economic outlook.


Global Equities 


Resilient economic data in February resulted in a rise in bond yields and a decrease in equity markets. With renewed inflation concerns, US equities stumbled with the S&P500 declining 2.4% during the month.

The European Central Bank, Bank of England, and Federal Reserve announced rate hikes at the beginning of the month. The overall message from their accompanying statements was that inflation remains excessively high despite recent declines and that central banks must continue their efforts.

Economic data suggesting a postponed recession prompted investors to adjust their forecasts for the peak in interest rates and future rate cuts, given the potential lengthier route to target inflation.

Despite the typical positive correlation between robust economic data and stock market performance, equity markets had priced in anticipated rate cuts and were more dismayed by the possibility of reduced monetary easing than they were encouraged by the delayed recession.

Across the globe, a rebound of consumer confidence helped the Eurozone stay positive with the FTSE 100 returning 1.8% and the DAX 30 returning 1.6%, while the Hang Seng Index fell 9.9% driven by escalating geopolitical tensions.


Fixed Interest


In a continued bid to reduce inflation to target levels, the Reserve Bank of Australia has raised the cash rate for a ninth month in a row, with a 25 bps increase announced in February. This brings the current February cash rate to 3.35%. Meeting minutes noted uncertain global outlook, upward surprises on inflation and wages, and the substantial increases in rates so far. The bond market reflected the rate rise with yields rising over the course of the month. Australian 2Yr and 10Yr Govt Bond yields rose by 49 bps and 30bps, respectively, leading to the Bloomberg AusBond Composite 0+ Yr Index to return -1.3% over the month. The Australian CPI inflation over the year to December 2022 was 7.8%.


Globally, fixed income markets were much the same. The US. Federal Reserve announced another 25bps rate rise on February 1, bringing the target cash rate to 4.5%-4.75%. US 2Yr and 10Yr Bond yields rose by 41bps and 69bps respectively. Similarly, U.K. 2Yr and 10Yrs Gilt yields rose by 61bps and 37bps, respectively, following the BoE decision to raise the Bank Rate by 50bps.


REIT’s (listed property securities)

The S&P/ASX 200 A-REIT Accumulation index sold off in February after a strong start to the calendar year in January, with the index finishing the month -0.4% lower. Global real estate equities (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) also regressed, returning -3.6% for the month. Australian infrastructure performed well during February, with the S&P/ASX Infrastructure Index TR advancing 1.9% for the month.

The Australian residential property market experienced no change (0%) month on month in January represented by Core Logic’s five capital city aggregate. Melbourne (-0.4%) and Brisbane (-0.4%) were the worst performers whilst Sydney (+0.3%) advanced during the month for the first time in twelve months.


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Changes announced to superannuation fund balances above $3m

8 March 2023

Changes announced to superannuation fund balances above $3m


Recently, the Australian Government announced the upcoming changes to tax concessions for superannuation balances above $3 million.

What does this mean for you?

There is no current impact for your superannuation fund. This announcement is a proposal only and is required to go through the parliamentary process before it is approved. If approved, the changes are proposed to commence on 1 July 2025 and is limited to those individuals who have more than $3 million in super at the end of a financial year. Therefore, it’s the balance at 30 June 2026 that matters initially. It should be noted that it’s $3 million per person, not per fund. The $3 million will however include all of a member’s super, ie both their pension and accumulation accounts combined.

How will the earnings and tax be calculated?

According to the factsheet released by Treasury, for people subject to the new rules there are three essential elements:

  • There will be a new, extra tax (at 15%) on some of their super’s earnings.
  • The tax will be levied on the member personally, not their fund.
  • They will be allowed to elect to take money out of their fund to pay it.

For those familiar with “Division 293” tax, the last two elements will feel familiar as this is how this additional tax is also managed.

The two key terms in the proposal are those in bold above – just some of the fund’s earnings will be taxed and earnings for this purpose has a special definition. Formulas and examples have been provided outlining how the calculations will work, but will include details such as opening balance, closing balance, contributions and pension payments. At this stage it has been stated that earnings will not only include the income a super fund would normally pay tax on – things like interest, rent, dividends or capital gains on assets it’s actually sold; but also growth in assets that the fund hasn’t yet sold. This is the area that seems most contentious and will require specialist advice on how to manage if affected.

How Boyce can help

At Boyce, we are committed to providing you with the latest information and advice on government legislation and its impact on your financial situation. As stated above, this announcement is a proposal only and is required to go through the parliamentary process before it is approved. As further details emerge we will provide updates via our e-alerts or direct contact.

If you would like more information or if you have any questions relating to this proposed change or your superannuation fund in general, please contact your Boyce accounting team who can connect you with one of our superannuation or financial planning specialists.

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Update to Corporate Services Program Annual Statement Packages

3 March 2023

Your Annual Statement package has been updated


We are happy to announce that Boyce is currently transitioning to a new Corporate Registry Services program. 

Why are we making this change?

The main reason for the change is to improve our services to you. This transition will allow us to be ready for the ASIC’s database upgrade that is in progress as well as offer enhanced collaboration options with you in the future. Please be assured that maintaining your confidential information has been our priority during this transition.    

How will this change effect you? 

The main change that will impact you will be how you pay your annual statement. Your annual statement package email and payment reminder emails will have a different format and wording.  

In addition to paying your ASIC fee the existing way by referring to the ASIC invoice statement, the new format will include a ‘Pay Now’ button for your convenience. An example of this button is below.   


The Pay Now button will take you directly to the Australia Post payment gateway and allow you to pay your ASIC invoice via credit card. 

Please remember to always check that the ASIC Billpay code when you enter it from the ASIC invoice is confirmed by Australia Post as being ASIC.

You will start to receive the newly formatted emails from beginning Wednesday 8th March 2023.

If you have any queries, please do not hesitate to contact the CRS team on 02 6884 6499 or .


Your Finance Update- February Summary

20 February 2023

Your Finance Update - February Summary

Positive start to the year - what more is to come? 

Over the course of 2022 our message to investors has been simple. Markets are in a period of transition and with transition comes some pain. The rapid shift from record-low interest rates and liquidity-fuelled markets, to one of higher interest rates and central banks shrinking their balance sheets has impacted markets. This has been coupled with the ongoing effects of Covid on economies, notably China and the unexpected conflict in Ukraine. Both events contributing to rising inflation which has been the topic du jour for all of 2022.

What can we expect from markets in 2023?

We should hit peak inflation in 2023. Central banks around the globe have been aggressively raising rates to curb inflation. In Australia, the December CPI figure hit 7.8% with the cash rate target reaching 3.10%. Cyclical indicators have been broadly trending down and we are yet to see the full impact of rate rises on households. We believe that demand will show more material signs of slowing in the second and third quarter of 2023, which should see inflation stabilise.

Mild recession is a possibility

The inverted yield curve is suggesting that a recession is on the cards. Historically, recessions have occurred 12 to 18 months after the yield curve has inverted. While the likelihood of a recession is elevated, the relatively strong labour market is expected to reduce the risk of a deep prolonged recession. We do however expect segments of the economy to be hit harder than others, such as the construction industry, which has already experienced a downturn following rises in interest rates. Conversely Australia’s exposure to materials and the reopening of China from strict Covid lockdowns is expected to benefit things such as iron ore exports.

Company earnings to slow second half of 2023

We are yet to see the full impact on demand of interest rate rises. While the savings ratio has been declining as households increasingly dip into their savings, households are still spending, with travel spending being the big winner. However, our expectation is that we will observe a slowdown in demand in the second half of the year as many household budgets get a jump in their mortgage repayments as their fixed rate loans roll-off and they move towards the higher variable rate. This should see a slowdown in discretionary spending which should show up in company earnings later in the year.

Range trading market

Markets have started 2023 on a positive note. Some of acute issues that adversely impacted markets in 2022 have subsided. Energy prices, which rose sharply following the Russian invasion of Ukraine have fallen with European gas prices falling by over 27% in January alone. Furthermore, the consumer is still buoyant despite higher interest rates.

As 2023 progresses and the impact of rising rates makes its way through the economy and company earnings come under increased pressure, we may see the market pull back. Net-net it is plausible that 2023 may be a relatively flat market characterised by spikes in volatility both to the upside and the downside.


Market Developments during January 2023


Australian Equities

The Australian market commenced the year convincingly, with the S&P/ASX 200 Accumulation Index rising by 6.2% and every sector finishing positively apart from the Utilities (-3.0%) sector. The gain represents the best start to the year since the inception of the Index. The Consumer Discretionary (+9.9%) and Materials (+8.9%) sectors led the market, as investor optimism around the future cash rate and inflation trajectory in an Australian and global context buoyed the broader market.

The Utilities sector was the biggest laggard as investors pivoted away from more defensive sectors in favour of more cyclical exposures. The Consumer Discretionary sector performed robustly as companies reported earnings. The Materials sector performed strongly as several commodities continued their recent rally on the back of the China re-opening demand. Further, the volatility in the Australian market was relatively subdued. Broadly speaking, the more ‘growth’ oriented and interest-rate sensitive sectors exhibited solid performance as investors weighed up the potential for central bank policy rate cuts in Australia and other global economies.

Global Equities 

Global equities started on a positive note as optimistic views around inflation fed through to possibilities around a reduction in central bank tightening. Emerging markets outperformed developed market counterparts returning 3.8% (MSCI Emerging Markets Index (AUD)) versus a 3.0% gain according to the MSCI World Ex Australia Index (AUD).

Investor confidence was elevated during the month as global macro data surprised to the upside combined with China reopening earlier than expected.  This was reflected by the Hang Seng Index and the CSI 300 Index, returning 10.4% and 7.4% respectively (in local currency terms) for the month. In the US, over a third of companies have reported, with earnings in aggregate being 0.6% above consensus and the S&P500 Index posting a monthly return of 6.3% (in local currency terms).

In Germany, the DAX 30 Index reported a gain of 8.7% for the month (in local currency terms) as it continued to benefit from the easing of supply disruptions, a decline in the risk of gas rationing and further fiscal support.


Fixed Interest

With no RBA meeting in January, there has been a pause on rate hikes, with rates expected to rise once again in February. This led to Australian 2- and 10- year Government bond yields falling by 23bps and 50bps, respectively. The fall in bond yields resulted in almost every fixed income sector being in the green, resulting in the Bloomberg AusBond Composite 0+ Yr Index to return 2.7% over the course of the month. Inflation has now risen to 7.8%, over the past 12 months to December, and CPI rose 1.9% this December quarter according to ABS data.

Subsequently the RBA increased rates at their 7 February meeting by 25 basis points to 3.35 per cent.  The December inflation figures were cited as a factor in this increase and the RBA observed that GDP growth, a tight labour market and wages growth are also factors being taken into consideration when making interest rate decisions. 

Globally, fixed income markets showed a mixed story, with US markets bracing for another rate hike in the next Federal Reserve Meeting on February 1. US 10-year Bond yields rose 37bps and US 90 Day T-Bill yields rose 30bps. In the United Kingdom, markets also await the return of the BoE meetings in February, with the current January bank rate sitting at 3.50%. Over January, U.K. 2 Year Gilt yields fell 11bps and U.K. 10 Year Gilt yields by 34bps.


REIT’s (listed property securities)

The S&P/ASX 200 A-REIT Accumulation index had a strong start to the calendar year advancing during January, with the index finishing the month 8.1% higher. Global real estate equities (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)) also finished strongly, advancing 8.2% for the month. Australian infrastructure performed well during January, with the S&P/ASX Infrastructure Index TR advancing 1.9% for the month.

The positive start to the year is a welcome sight for REIT investors, as the listed property sector suffered a material decline in 2022. 2022 was the worst-performing year for REITs since the global financial crisis. Capital raising is expected to be a prominent theme in Q1 this year with the significant change in debt markets and cost of capital. In the global REITs market, we have already seen eight capital offering instruments in January, raising a total of $4.1bn in capital, in contrast to the $250m raised in December.

The Australian residential property market experienced a –1.1% change month on month in January represented by Core Logic’s five capital city aggregate. Brisbane (-1.4%), Sydney (-1.2%), Melbourne (-1.1%) and Adelaide (-0.3%) all performed poorly whilst (0%) stayed relatively neutral.



So, high inflation not all bad?

8 February 2023


With the recent release of the CPI figures for the December 2022 quarter, changes are set for superannuation as of 1st July 2023.

This has not yet been formally announced by the ATO so any advice will be pending the formal announcement and the outcome of the Federal Budget in May (the government could in theory freeze any changes that are currently scheduled to occur).

What are these proposed changes? 

Based on the December CPI figures, the general Transfer Balance Cap is set to increase to $1.9M.

Who might benefit from this change? 

For those that have not previously started a pension from their superannuation. The amount that can be transferred into the retirement phase of superannuation will be $1.9M (this is increasing from $1.7M). This means for some, an additional $200,000 may be held in the tax-free part of the superannuation system.

Existing superannuation pensioners. If you already have a pension prior to July 2023, the ability to increase what is held in pension phase will depend on your own personal Transfer Balance Cap. Some people may not be able to increase the amount in pension phase at all (if the prior general transfer cap had been fully utilised and this was either the original cap of $1.6M or the current cap of $1.7M).

People with high balances who are seeking to make further contributions. Additional non-concessional contributions (where a tax deduction isn’t claimed) may be possible for those members with balances between $1.7M and $1.9M. Additionally, the bring forward rule could be fully utilised for those members with balances under $1.68M. This means a non-concessional contribution up to $330,000 could be potentially made in a single financial year from July 2023.

What strategies should you be considering? 

For those considering starting a pension in this current financial year should you defer and wait until 1st July 2023?

Those considering contributions above the annual cap of $110,000 in the current financial year may be better deferring the contribution amount above the annual cap until after the changes take effect.        

Superannuation members with Transition to Retirement Pensions who are reaching age 65 prior to July 2023 may consider whether to defer converting to pension phase until after the changes take effect.

Please note that each of these strategies will depend on your individual circumstances and it is important to seek personal advice before taking any action.




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