The former Australian government changed the rules regarding the taxation of superannuation investments in mid-2007. The temporary exempting of contributions worth up to $A1m prompted many investors to make large contributions at the time, but they are now facing losses in early 2008 due to the deterioration of stock markets around the world. Already in the period of 2007-08 so far, there have been no returns for the average super fund, due to the effects of the sub-prime mortgage loans crisis and fear of recession in the US. The likely negative performance of the super sector should be seen in the context of five consecutive years of double-digit growth, experts note. The consensus also still sees the Australian economy recording further strong growth in 2008. Strategies in the current climate include a flight to cash and the pursuit of bargains among falling stocks.
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