Market Update: Helping you put the recent share market volatility in perspective

In the past week we've seen high levels of volatility in world stock markets leading to significant falls globally.

These falls have been led by the Chinese stock market, the move by the People's Bank of China to devalue their currency and softening of the Chinese economy.

So, why has this happened and what is the outlook?

We have seen these types of market movements before. It is good to remember that there are two main things that drive investment markets – valuation (what the market is actually worth and the key economic fundamentals) and sentiment (how investors feel and react).

We believe that the current market movements have been largely driven by sentiment and importantly valuations remain reasonable at both a country and company level. Also the financial health of the Chinese economy is much sounder - with lower levels of debt, higher levels of cash, constraints on spending and steady revenues. The health of these sort of economic indicators in both the Chinese and U.S (the two largest economies in the world) is the main difference to the type of conditions we saw during the Global Financial Crisis in 2007/8.

If anything, we believe these short term events may provide a potential opportunity for long term investors, like VicSuper, to purchase quality assets at a discounted price.

Longer term, we remain confident that we have our Fund positioned correctly to continue to deliver our longer term performance goals, by both protecting against downside risk, and identifying and capitalising on opportunities as they arise.

Superannuation is a long term investment and it's important to remember that the world economies are in better financial health than what may be implied in a newspaper headline. The nature of the share market is that it will experience ups and downs. Whilst sentiment might drive short term behaviour, it's the health of the global corporates and economies that will determine the value of the market into the future.

As always, we're here to help. If you'd like to chat to someone about your investment options, please call our Member Centre on 1300 366 216 or book an appointment with one of our qualified Financial Planners online.

In the past week we've seen high levels of volatility in world stock markets leading to significant falls globally.

These falls have been led by the Chinese stock market, the move by the People's Bank of China to devalue their currency and softening of the Chinese economy.

So, why has this happened and what is the outlook?

We have seen these types of market movements before. It is good to remember that there are two main things that drive investment markets – valuation (what the market is actually worth and the key economic fundamentals) and sentiment (how investors feel and react).

We believe that the current market movements have been largely driven by sentiment and importantly valuations remain reasonable at both a country and company level. Also the financial health of the Chinese economy is much sounder - with lower levels of debt, higher levels of cash, constraints on spending and steady revenues. The health of these sort of economic indicators in both the Chinese and U.S (the two largest economies in the world) is the main difference to the type of conditions we saw during the Global Financial Crisis in 2007/8.

If anything, we believe these short term events may provide a potential opportunity for long term investors, like VicSuper, to purchase quality assets at a discounted price.

Longer term, we remain confident that we have our Fund positioned correctly to continue to deliver our longer term performance goals, by both protecting against downside risk, and identifying and capitalising on opportunities as they arise.

Superannuation is a long term investment and it's important to remember that the world economies are in better financial health than what may be implied in a newspaper headline. The nature of the share market is that it will experience ups and downs. Whilst sentiment might drive short term behaviour, it's the health of the global corporates and economies that will determine the value of the market into the future.

As always, we're here to help. If you'd like to chat to someone about your investment options, please call our Member Centre on 1300 366 216 or book an appointment with one of our qualified Financial Planners online.