The challenge for Australia is the ability to use the financial resources generated by superannuation and the private wealth market to exploit new and emerging opportunities, according to Rice Warner.
The research house said, given the uncertainty the COVID-19 pandemic had brought, the country needed to think about the impact of the size and share of the super system which was the biggest engine available to finance the investment Australia needed.
While understanding future growth of super assets and where they might be deployed was essential to planning, modelling would be a significant challenge this year due to the pandemic.
“Whilst a permanent reduction in the population growth rate would provide an opportunity for per capita GDP to grow and enrich all Australians, the political mantra of growth for its own sake will probably prevail,” Rice Warner said in an analysis.
It said the differences to modelling this year were:
Rice Warner said short-term impacts included:
The research house noted that knowing these factors had moved to “extremal values was only part of the challenge” and that estimating the extent of the divergence in these factors from long-term trends, and how long the divergence would last, added significantly to the complexity and uncertainty of modelling.
“Rapid V-shaped changes in equity market valuations do not translate directly to the broader economy. Scenario testing will be very important this year,” it said.
While institutional investors, including super funds, unanimously acknowledge the energy transition as a significant challenge, their perspectives on the extent of their involvement in addressing the substantial capital requirements vary widely.
Despite a period of increased volatility, several considerations suggest that the bull market will remain intact and the trend in shares will remain up, an economist has suggested.
HESTA has slammed Woodside’s climate transition action plan, pointing to “significant” gaps.
All merger proposals will have to be approved by the consumer watchdog under the sweeping merger reforms announced by the government on Wednesday.
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