PENSION FUNDS SUFFER EURO ZONE TURBULENCE - Pension funds took a hit last month, perhaps not surprisingly, as investors worried about the re-emergence of the euro zone debt crisis with particular focus on Spain's budgetary and banking problems. Aon Hewitt's managed fund index for Ireland, which tracks performance across a basket of Irish pension funds, was down 0.4% in April, the latest figures show.
Aon noted that Irish pension schemes with a more globally diversified asset allocation outperformed during the month as US and UK stock markets posted positive returns for euro based investors as the euro weakened against competing currencies.
Deborah Reidy, an investment consultant with Aon Hewitt, said that the performance of the managed pensions funds flattened out a little last month, but the index has risen by 7.1% since of the start of the year. She says the value of pensions has started to make up some of the ground lost during the credit crisis, but adds that the average pension fund still has a deficit of about 30%. She says that while most pension funds would love to derisk, they can't afford such a move.
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MORNING BRIEFS - Fashion chain Next says retail sales over the first quarter fell almost 4%. That was expected, according to Next, because during the same period last year it saw the benefit of warmer weather and a royal wedding. However catalogue and online sales through its Next directory business up almost 12% and Next said, overall, it expects its first half profit for this year to be ahead of last year even without a royal wedding to swell the coffers.
*** Ireland's dependence on our traditional export markets in Europe is highlighted by a report from the Irish Exporters Association this morning. The IEA said that total export sales were up 3.6% over the first three months of this year compared to the same period in 2011. It predicts exports will grow by just 3% for the year as a whole - is well below what would be required to create any significant number of new jobs in the sector. Because well over a third of our exports go to the euro zone, the IEA is expecting sluggish growth in that part of the world to hit exporters hard. While exports to Brazil, Russia and India are growing by double digits in percentage terms just 4% of Irish exports go to the so-called BRIC countries. The average for the 27 EU nations is that these countries account for 20% of their exports.
*** US factory activity grew at its strongest pace in almost a year according to the Institute for Supply Management's index which is a very closely-watched gauge of economic activity. The ISM's figure for employment also rose to its highest level since last June. Friday sees the US bureau of labour release the non-farm payroll figures which will show us at what pace jobs are being added in the world's largest economy. After a weak number last month cast doubt on the strength of the US economic recovery Friday's report will be all the more important.
