The RBA is alert to the risks of a shrinking ASX
The central bank says the growing clout of private equity firms and their desire to take ASX companies private will reduce transparency and diversity on the local market.
The Reserve Bank has been keeping a close eye on changes in investment activity in Australia's capital markets. And the central bank, like others before it, has noticed a trend away from public markets to private markets, a trend that could have risks and some rewards for businesses and the economy.
In its latest quarterly Bulletin, the RBA looked at 10 focus areas including Chinese monetary policy settings and the country's demand for steel, the pass-through of domestic rates onto mortgages and the impact of climate change on residential mortgage backed securities.
The research is considered to be at the forefront of economic analysis nationally and is regularly referred to by policymakers and market analysts.
In the Bulletin, the RBA noted private equity funds’ assets under management in Australia surged to $66 billion in June last year or about 2.6% of GDP. About $44 billion of this is already invested in Australian companies with the balance yet to be spent.
