Australia’s sharemarket increasingly looks like the laggard of global equities, with local investors watching offshore AI-fuelled rallies leave the ASX in the dust. The S&P/ASX 200 Index has delivered just a 1.2% gain so far this year, a result that feels flat in a boom.
By contrast investors in US and Japanese growth stocks are enjoying double-digit returns. That performance gap is starting to test patience.
Strategists point to a mix of high interest rates, steep local equity valuations and recent federal government tax changes as the core problems. While benchmark borrowing costs stay elevated, income-focused investors can earn more from cash or bonds, reducing the appeal of shares.
Tax adjustments targeting property and related sectors weigh on key parts of the index. Those headwinds combine to leave the ASX looking less competitive against global markets.
Performance comparisons tell a stark story. Wall Street’s tech-heavy Nasdaq has jumped about 14% this year, powered by companies leveraged to artificial intelligence.
Japan’s Nikkei 225 has surged roughly 43% for the year, helped by corporate reforms and strong foreign inflows. Australia’s 1.2% rise looks negligible, especially for global funds choosing where to allocate capital.
Market analysts say international investors now see better risk‑reward profiles elsewhere.
Australia’s bourse is slipping down the global pecking order just as AI and technology reshape equity leadership. Elevated rates and tax changes linked to property arrive at a time when investors search for growth and policy stability.
If capital keeps shifting to markets such as the US and Japan, the local exchange risks looking increasingly peripheral in global portfolios. Long-term competitiveness is now central to the ASX debate.
