From the AFR:
Australian companies, wracked with fear, are stifling their growth by confining themselves to the domestic market, said Goldman Sachs Asset Management’s head of Australian equities, Dion Hershan.
Mr Hershan criticised investors, public company management teams and boards of directors for being obsessed with the fear of looking offshore for growth in a note he distributed to GSAM’s institutional clients, including industry and for profit superannuation funds.
“I happen to think companies have squandered an opportunity over the last few years; we’ve had elevated currency and open debt markets but there’s been little activity [exploring overseas expansion],” he said.
From the look of his photo (not the one above), Hershan appears to be around 22 years old so let’s take a grain of salt on the fear angle. I’ve looked at this question for 12 years, including coordinating The Diplomat’s Global 100 specials, which examined such questions in detail.
Fear was not the major inhibitor. The real cause was obesity.
Australian companies exist in a rent-seeking nirvana. All major sectors are overly-concentrated and the margins available on just about everything are therefore fabulous, even after inept management and over-weaning unions have whittled down returns.
Running a listed company is about being a private sector bureaucrat not a scything disruptor. Managers can move across totally unrelated fields without blinking an eyelid. There’s no hard core specialisiation to offer a competitive edge. Managements and boards are private school buddies that give each other a call when they want to knock off or sell an asset or two. Strategies are about taking 1% market share from your duopolistic mate and retiring a share market hero. Capital management is about fat dividends to other private school buddies, boosted by a fabulously generous franking credit regime.
Australian firms don’t have to compete, don’t have the skills and drive that arises when one does have to compete and, frankly, are quite right to stay at home given their fed and fattened state.
