Are Australian businesses set up for success?
Speaking at the MLS Alumni Breakfast Seminar in November, Executive Director and Co-Head of Macquarie Capital Tim Joyce (BCom, LLB(Hons) 1998) shared his insights and commentary on the impact current economic trends are having on Australian businesses.
“Overall it is a good news story for Australians today and there are a lot of opportunities for Australian companies to pursue their ambitions here and all over the world,” Joyce said.
Key among the reasons for Joyce’s positive outlook are the fact that world economies are generally healthy, manufacturing and services sectors are expanding, and business investment is improving.
The strength of Australia’s superannuation pool was also recognised by Joyce as a feature of the market that sets up Australian companies for success.
“It [superannuation] has been a really helpful part of the market and has given a shot in the arm to investment activity,” Joyce said.
Australia currently has the fourth largest superannuation pool globally with approximately $1.58 trillion US dollars invested in superannuation funds. Joyce outlined that Australian assets and companies are well positioned to benefit from these high levels of investment capital.
Interestingly, Joyce noted that ASX Listed companies have relatively low investment in international markets, even though International businesses have consistently delivered stronger revenue growth and better shareholder returns.
However, Joyce commented that Australian companies are heeding the challenge and offshore mergers and acquisitions are increasingly becoming a focus for corporations looking for incremental growth.
“Australian companies are feeling more confident about being exposed to international markets,” Joyce said.
Other features of the market that Joyce touched on included the rise of shareholder activism and the increased popularity of environmental, social and governance investing (“ESG”).
“Whilst activism is getting a lot of attention at the moment, it is not new,” Joyce said.
Joyce also outlined that ESG factors such as the environment, demographics, employee engagement and digital disruption are having an impact on the strategic priorities of Australian companies.
“Fifty percent of assets under management in Australia now have this lens of ESG,” Joyce said.
“Basically, this [ESG] means taking account of a broader view of investing considerations than dollars and cents – it’s not just about returns; it’s about social licenses to operate.”
Nevertheless, Joyce said he did not think shareholder activism and ESG will inhibit the success of Australian companies overall.
“It’s not all rosy, but overall we think it is actually an improving global outlook, we think the Australian economy is in pretty good health,” Joyce said.
“I think the answer is very clearly that Australian companies are set up for success.”