Foreign Takeovers Set to Shrink Australian Stock Market

Australia’s stock market is shrinking for the first time in eight years. For Credit Suisse Group AG, that’s a signal to buy.

Buybacks, acquisitions and delistings will outweigh equity issuance by as much as A$2 billion ($1.9 billion) this year, the first time that has happened since 2006, according to data compiled by Credit Suisse. The purchases of David Jones Ltd. (DJS) and Goodman Fielder Ltd. and other mergers will drain about A$22 billion from the market in 2014, the data show.

The shrinking A$1.5 trillion stock market is struggling to accommodate Australia’s A$1.6 trillion in pension savings, which are forecast to almost double by the end of this decade. Hasan Tevfik at Credit Suisse says the falling share count will boost the benchmark S&P/ASX 200 Index (AS51) to 6,000 points by year end as demand outweighs supply. That’s about 8.2 percent higher than yesterday’s close.

Bloomberg

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