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Near-term market recovery unlikely: Argo
Argo chief executive Jason Beddow.

Investment firm Argo Investments says global equity markets are unlikely to show any meaningful recovery in the short term but, in the long term, the Australian market represented relatively good value.

Argo today posted an annual net profit for the 2011/12 financial year of $167.3 million, down 2.8 per cent on the prior year.

The prior year's bottom line received a $13.7 million boost from one-off transactions.

In the 2011/12 financial year, one-off additional income totalled $1.3 million, coming from a share buyback by Perpetual Ltd.

Argo chief executive Jason Beddow said global markets were struggling as the economies of many developed countries continued to slow, and the European debt crisis regained prominence.

Tough austerity measures in response to unsustainable sovereign debt levels in Europe were pushing many countries into recession, and the region was likely to remain a potential source of adverse shocks for some time to come.

"Meaningful recovery in global equity markets in the short term is unlikely," Mr Beddow said.

It was impossible to say how long the European debt crisis could drag on, given its political complexity and the difficulty in executing proposed solutions.

In Australia, the share market had experienced another difficult year as investors juggled with the European debt crisis, a slowing Chinese economy and concern about US economic recovery.

For the rest of this year, it was hard to see the Australian share market making any material gains given that a likely change in political leadership in China later this year and a US presidential election in November may hold up the resolution of some issues pressing upon global markets.

Mr Beddow said many investors were now changing the types of things that they invested in - switching from equities to convertible notes, hybrid securities and corporate bonds - as they sought greater security.

Mr Beddow said, however, that Australia was well placed to weather future shocks given its relative strength compared to other western economies.

"With this background in mind, we remain of the view that for a long-term investor, the Australian equity market is relatively good value."

Argo said that as a result of a general decline in investment values, the total return from the company's portfolio in the 2012 financial year was a negative 5.7 per cent, compared to a fall in the Australian market of seven per cent.

Argo said its profit, after allowing for one-off transactions, reflected an increase in dividends and distributions received from some of the companies and trusts in its investment portfolio.

This was partly offset by reduced interest income, which reflected lower interest rates on Argo's cash deposits.

Argo declared a fully-franked final dividend of 13 cents per share.

Shares in Argo were seven cents higher at $5.45 at 12.19pm.