Via Domainfax:
Bell Potter senior trader Richard Coppleson attributed the market’s robustness to the superannuation changes taking place on July 1, which will place caps on concessional contributions.
Super fund members are able to bring forward non-concessional contributions of up to $540,000 in 2016-17, but from July this falls to $300,000 for 2017-18.
“With the super changes on July 1, 2017, we are seeing massive (last minute) inflows in to super. The size of the inflows I understand is very large and (will continue to have) an influence on the market,” he wrote to clients.
Around 40 per cent of all contributions into superannuation in turn go into the Australian sharemarket, noted Katana Asset Management’s Romano Sala Tenna.
He was nonetheless not expecting the rally to continue much further from here.
“We’re a little bit surprised it’s bounced so aggressively,” he said. “There’s no doubt that equities are, at least, fully-valued right now.”