Martin Conlon, head of Australian equities at Schroders, cautions investors against assuming current market conditions will persist indefinitely. He believes the market is in disequilibrium, leading to potential investment mistakes. Conlon highlights concerns about the sustainability of Australia’s economy, which is heavily reliant on high house prices and immigration. He likens this dependence to a Ponzi scheme, warning that affordability and global competitiveness must take precedence for long-term stability. Schroders is a global asset manager offering a range of investment strategies to institutions and individuals. The company manages investments across various asset classes and geographies.
Conlon points to the inflated valuations within the Australian banking sector, particularly given the connection to the housing market. He references discussions with ANZ boss Nuno Matos and raises doubts about current cost structures, technology spending, and the profitability of broker-originated mortgages. Conlon also questions whether local investors are adequately considering the possibility of a housing market correction, especially given rising house prices in spite of increasing mortgage stress on households.
Furthermore, Conlon expresses scepticism towards critical minerals firms and gold, noting that their recent surges may not be sustainable. He also addresses the pervasive hype around artificial intelligence (AI), questioning which existing profit pools AI will ultimately draw from. Conlon is wary of companies rushing into deals with AI giants, fearing that they may become overly dependent and vulnerable to price increases. He suggests investors should focus on sectors such as construction and healthcare where long-term demand is more assured.
