AMP confirms sensitivity to market fluctuations
AMP has today confirmed its sensitivity to the world’s investment markets after earlier this week announcing that it is expecting to face greater than anticipated losses in its investment income as a result of the continuing downturn in global equity markets.
In an announcement to theAustralian Stock Exchange(ASX) the funds management giant says that a 5 per cent movement in the ASX All Ordinaries has a corresponding impact of $60 million on AMP’s investment income, while the same movement on the English FTSE 100 index would account for an impact of $45 million.
AMP says that with $10 billion of its investors’ capital invested in global markets, “even minor movements in investment indices can significantly impact investment earnings and headline profit”.
Earlier this week, AMP said its investment income in the first half of 2002 would be negative, and worse than the result recorded by the group for first half of 2001, because of the continuing downturn of equity markets around the world.
In the six months to the end of June, 2002, the ASX All Ordinaries index fell 6 per cent, while the UK FTSE fell 11 per cent, says AMP.
According to AMP, the fall in investment markets would imply a total fall in the group’s capital portfolio of around negative 0.25 per cent for the six months to the end of June, 2002.
However, the actual investment income figure for the period will not be known until actual asset allocations and valuations, currency impacts, dividend and interest income and effective tax rates are calculated.
AMP says it is still too early to comment on final income or net profit numbers.
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