I came across this Morgan Stanley chart today showing the sectoral split of the ASX by market cap:
Until recently, Australia was widely thought of as a one-trick mining pony. But we’ve clearly switched nags now.
The imbalance is all the more stark when you compare it to other supposedly “financialised” economies such as the US and UK. The US has a very diverse bourse:
Forgive the 2012 chart but you get the idea.
The UK is more imbalanced but nothing like as bad as Australia:
We truly are the mortgage (and a little mining) specialists of the known universe. Does it matter?
So far it hasn’t if you’re a pragmatist. That the entire national economy and Budget are now irretrievably married to the banks only matters if you believe in abstract notions of market integrity, moral hazard, risk mitigation or inter-generational equity.
But if it ever does matter, boy, will it matter.
