Australia's sharemarket could jump as much as two thirds over the next decade, underpinned by a booming superannuation sector and the nation's status as a 'growth haven', according to a new report by Macquarie Research.
The report released today, says the ASX 200 could climb from its current level at just below 6,000 points to 10,000 points over the next 10 years, and to 20,000 by 2040.
Jason Todd, head of Australian macro-economic research at Macquarie, said Australia's super pool, which is expected to rise from $2.3 trillion to around $8.8 trillion over the next 25 years, would provide a "backstop" to equity markets and demand for new listings.
He argues that while many view the Australian market as expensive, it is currently trading at 16 times earnings versus a long-run average of 19 times. The US sharemarket is trading at 29 times.
James McIntyre, head of economic research for Australia at Macquarie, described Australia as a "growth haven", pointing out that economic growth has outstripped other advanced economies by 0.7 per cent over the past 25 years.
...While recent changes to Australia's immigration policies showed it would not be untouched by this shift, which Macquarie sees as structural rather than cyclical, Mr McIntyre said support for immigration was still relatively high compared to other nations. He estimates this support gives the Australian economy a 1 percentage point boost compared to other advanced economies.
The Macquarie report suggests four sectors that should do well over the next few decades: education, tourism, services and agribusiness.