Super outgrowing ASX opportunities

The superannuation industry is rapidly out-growing the ASX, the Association of Superannuation Funds of Australia (ASFA) director, investments and economy, Gordon Noble, has told the Financial Services Symposium in Melbourne.

The industry must collaborate to create more opportunities to invest in innovation assets such as biotech and clean technology, he said.

Noble said the market cap of the ASX was around $1.38 trillion, while the value of superannuation assets had grown by $192.2 billion over the last 12 months and showed no signs of abating. Total contributions in 2012 were $92.2 billion, up from $83.8 billion in 2011, he said.

Noble forecasted funds would invest up to an additional $20 billion into the ASX each year; and because 92 per cent of the market was made up of companies with a market cap of less than $1 billion, that equated to 20 $1 billion companies.

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Similar codes to those related to mining, which had propelled the sector's growth, could be applied to other areas of the ASX to support the development of other sectors, according to Noble.

He cited the code of best practice for reporting by life science companies as a drawcard for US biotech companies listing on the ASX.

Noble said ASFA was in the process of restructuring its committees and developing an innovation working group to provide a place for strategic discussion about developing the ASX.

He said the decline of the Dutch empire [in the 17th-18th centuries] was in part due to the fact the upper class preferred to invest in economies other than their own, Noble said. Similarly, it would create long-term problems today if super funds increased allocations to global markets and diversified away from the ASX.

"Whilst things may have moved on over the last 300 years, the reality is that the superannuation industry and the economy are interlinked," he said.

"Our contributions come from millions of Australians who rely on a strong economy for their future work."

It was the industry's responsibility to make the ASX a better place for future investment, Noble said.