ANALYSIS AND COMMENTS MARKET SUMMARY


FINANCIAL MARKET SUMMARY

Selected Financial Instruments
	Outstanding at end	Trans- actions during	Other changes during	Outstanding at end
	Sep Qtr 2008	Dec Qtr 2008	Dec Qtr 2008	Dec Qtr 2008
Selected Financial Instruments	$b	$b	$b	$b
Currency and deposits	1 415.4	107.6	15.0	1 537.9
Short term debt securities	641.1	-79.5	6.9	568.5
Long term debt securities	1 099.2	82.8	78.6	1 260.6
Derivatives	357.9	-15.4	55.1	397.6
Loans and placements	2 376.1	34.5	23.2	2 433.8
Listed shares	1 177.5	35.4	-260.3	952.6
Unlisted shares	1 128.7	-0.4	-73.6	1 054.8
Reserves of life offices and pension funds	1 082.1	9.6	-105.3	986.3
General insurance prepayments and reserves	71.1	0.6	0.0	71.7

Deposit liabilities increased by $122.5b to $1,537.9b at the end of December 2008, following transactions of $107.6b compared with transactions of $60.3b in the previous quarter. The major contributors were banks which accepted $56.7b (up $11.1b) and the central bank which accepted $32.7b (up $26.1b). Domestic sectors deposited a net $8.8b with the rest of the world.

Short term security liabilities decreased by $72.7b to $568.5b at the end of December 2008. There were net redemptions of $79.5b, made up of $4.5b in issues of bills of exchange and $84.0b redemptions in one name paper. Total long term debt security liabilities increased by $161.4b to $1,260.6b at the end of December 2008, following net issues of $82.8b during the quarter. Banks issued net $12.0b of bonds domestically and net $7.7b offshore to give total issuance of net $19.7b. Financial intermediaries n.e.c., private non-financial corporations and central borrowing authorities issued net $58.4b, $10.6b and $6.3b respectively, whereas rest of the world redeemed net -$9.1b. See the note on page 6, ABS treatment of internally securitised paper for more detail.

Derivative contracts on issue increased by $39.7b to $397.6b. Components of the increase were net settlements of $15.4b and valuation increases of $55.1b.

Loan liabilities rose by $57.6b to $2,433.8b following transactions of $34.5b and valuation increases of $23.2b. Non-financial corporations borrowed net $11.0b, rest of the world, net $9.2b and households net $8.2b.

The listed share market decreased by $224.9b to $952.6b, with valuation decreases of $260.3b and net issues of $35.4b. Banks issued net $20.4b and private non-financial corporations net $12.4b. The unlisted share market decreased by $73.9b to $1,054.8b, with buy-backs of $0.4b and valuation decreases of $73.5b. Financial intermediaries n.e.c bought back net $5.3b, rest of the world net $2.3b, and private non-financial corporations issued net $8.5b during the quarter.

At the end of December 2008, the reserves of life offices and pension funds decreased by $95.8b to $986.3b, following transactions of $9.6b and valuation decreases of $105.4b. Other insurance corporation prepayments and reserves were $71.7b.