Economic Review
Global Equity Market Review
Global equity markets experienced significant volatility in February 2025, influenced by various economic and geopolitical factors:
Developed Markets: The MSCI World Ex-Australia Index (AUD) declined by 0.36%, with US and Japanese markets facing notable challenges. The S&P 500 fell by 1.3% due to trade tensions, weaker economic data, and persistent inflation concerns. Mega-cap tech stocks, including the Magnificent 7, had their worst month since December 2022, falling into correction territory as investors reassessed high-growth valuations and AI sector momentum.
European Equities: European markets outperformed, with the MSCI Europe ex-UK Index rising by 3.7% in February (local currency terms). This performance was driven by strong earnings reports and optimism around a potential Ukraine ceasefire. The European Central Bank held rates steady, with expectations of further cuts later in the year.
Emerging Markets: Emerging markets outperformed developed markets, with the MSCI Emerging Markets Index (AUD) gaining 0.79%. The Hang Seng Index surged by 13.43%, driven by Chinese tech strength and policy support, while the CSI 300 gained 1.91%. Latin American equities also advanced, particularly in Chile and Colombia, as stable commodity prices fueled optimism.
Australian Share Review
The Australian sharemarket faced a challenging month in February 2025, with the ASX 200 Accumulation Index falling by 3.8%:
Sector Performance: Losses were broad at a sector level, with seven of the eleven sectors posting negative returns. Defensive sectors such as Utilities (+3.2%), Communications (+2.6%), and Consumer Staples (+1.5%) posted gains, while Information Technology (-12.3%), Health Care (-7.7%), Property (-6.4%), and Energy (-5.2%) were the biggest laggards.
Key Drivers: The I.T. sector, like may across global markets, felt the effects of the move into Chinese tech stocks. Wisetech, the largest I.T. company in the ASX 200, was a significantt drag, down 25.5% in February due to continued governance issues.
Economic Indicators: The Reserve Bank of Australia (RBA) began its rate-cutting cycle by reducing the cash rate by 25 basis points to 4.10%, marking the first rate cut since November 2020. This decision was influenced by moderating inflation and global uncertainties.
REITS – Real Estate Investment Trusts Review
The REITS sector experienced mixed performance in February 2025:
Australian REITS: The S&P/ASX 200 A-REIT Accumulation Index TR continued to fall, finishing the month down 6.4%. The index is in negative territory year-to-date, down 2.0%12. Global REITS:
Global real estate equities remained positive, increasing by 2.5% (represented by the FTSE EPRA/NAREIT Developed Ex Australia Index (AUD Hedged)). Australian infrastructure moderated with a return of -0.7%, slowing its growth after an increase of 16.3% in the prior 12-month period12.
Market Activity: February saw an uptick in M&A activity in the Australian A-REIT sector. Notably, Hotel Property Investments (HPI) and the Charter Hall Retail REIT (CQR) led consortium is in its final stages, with CQR acquiring 90.86% of HPI securities, allowing for a compulsory acquisition.
Written March 2025.
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