More Stock Market Turmoil for Australia

As global markets continue to ride a wave of volatility, Australian investors may find themselves in a relatively stable position, at least for now. In a recent conversation on ABC Radio Melbourne’s On The Money, share market expert Remo Greco offered insights into shifting trends in global capital and what it all means for Aussie portfolios and superannuation funds. More Stock Market Turmoil for Australia

Global Uncertainty Shakes Confidence

Traditionally seen as a haven for global investment, the US faces mounting challenges. “The US markets are just not dependable at the moment,” said Greco. With a weakening US dollar, rising interest rates, and disappointing share market performance down 16% this year, the “Brand America” appeal has taken a hit.

Investment decisions from large institutions often take months, involving layers of internal reviews and board approvals. But the trend is now unmistakable: capital is drifting away from the US in search of more stable and undervalued markets.

Australia and India Emerge as Surprising Safe Havens

Despite global turbulence, Australia is proving resilient. Local superannuation funds, especially industry super funds, have increased their domestic holdings, moving Australian share exposure from 26% to 29%. It turns out this “home bias” has paid off.

In global rankings, Australia and India have been highlighted as the two countries among the top 30 least affected by tariffs and White House policy shifts. This has encouraged investors to consider reallocating away from the US and into markets like Europe and Australia.

Europe: The Forgotten Continent Gets a Look-In

While China remains off the buy list for many global investors, Europe is having a moment. “Europe has been so cheap for so long,” Greco explained, noting that investors are now gravitating toward high-quality but undervalued European stocks.

Funds like PM Capital Global, which has steered clear of the US in favour of “unloved” European stocks, have reaped the rewards, posting returns of 20% per annum for the past three years. This shift is also evident in the popularity of ETFS like VEU (global ex-US) and VTS (US total market), allowing investors to balance exposure between American and non-American equities.

CBA and the Surge in Australian Blue Chips

The top Australian banks, particularly Commonwealth Bank (CBA), have also been key beneficiaries of this shift. With foreign capital flowing in and a significant portion of CBA shares held by long-term Aussie investors, limited market liquidity has pushed the stock up sharply.

As Greco noted, “When a bit of money comes in, there’s an outsized event… CBA could continue to do well.”

Self-Managed Super Funds Playing It Safe

Interestingly, self-managed super funds have largely avoided the chaos. These investors have maintained a home bias, generally sticking to Australian shares. While they may have missed the highs of US tech stocks like Amazon and Microsoft in recent years, their conservative positioning is now serving them well in a time of US market uncertainty.

What Can Investors Do?

For everyday investors or those managing their own super, Greco offered practical advice:

• Start small: Platforms like CommSec Pocket provide low-cost entry into diversified buckets of investments based on your risk profile.

• Diversify globally: Consider ETFS like VEU or European-specific funds listed on the ASX, which include giants like LVMH, Siemens, and SAP, currently trading at a discount compared to their US counterparts.

• Reassess your super: Log into your super account, check your current allocation (e.g., conservative vs balanced), and consider whether it’s time to increase your exposure to growth assets.

What’s Next for the US?

Will the US markets bounce back? Greco isn’t sure. While sentiment indicators look grim, hard data hasn’t completely caught up. The unknown effects of tariffs and ongoing policy confusion mean more uncertainty ahead. Meanwhile, safe-haven assets like gold and even Bitcoin are seeing increased interest, further signalling investor scepticism toward US assets.

Final Thoughts

While “Brand America” falters, Australian investors are enjoying a moment of relative calm. But the lesson from Greece is clear: markets are changing, and diversification matters now more than ever. Whether you’re managing your super or just looking to get started in investing, this may be a good time to reassess your strategy, and maybe look beyond the usual suspects.