As Donald Trump pulled ahead in the United States’ election polls on Wednesday, and global sharemarkets plunged, the mood at the year’s biggest gathering of Australian superannuation industry executives turned skittish.
Nearly 2000 senior people employed in the business of running Australia’s $2.1 trillion compulsory retirement savings pool were gathered at the Gold Coast Convention and Exhibition Centre for the first day of the Association of Superannuation Funds of Australia (ASFA) annual conference.
However, the large crowd that had assembled in the morning quickly thinned after lunch as news filtered through that Trump had won the key swing states of Ohio, then Florida, and North Carolina.
Chief executives and investment chiefs scurried back to their offices to sign-off on emails and record messages urging their fund members not to panic and switch their retirement savings into cash.
Just a few days ago Investment Magazine polled the investment chiefs of four major super funds – Perpetual, MLC, AMP Capital, and Cbus – about how they were positioned for a Trump victory. All talked down the likelihood of it happening but said they were braced for a short-term sell-off, with the longer-term implications harder to predict.
Referring to the US election race, Energy Super chief executive Robyn Petrou said the world was “in a state of flux” and this would have a “big impact” on how local super funds managed Australians’ retirement savings.
JP Morgan chief market strategist for the UK & Europe, Stephanie Flanders, said investors were experiencing a “sense of Brexit déjà vu”, with the market slump reminiscent of that seen in June following the shock “yes” vote in the United Kingdom’s referendum on whether to leave the European Union.
US-based Geopolitical forecaster and author Dr George Friedman said the Trump phenomena was similar to Brexit, in that political and industry leaders had failed to understand deep levels of dissatisfaction within their communities.
“A friend of mine in England told me he’s never met anyone who voted for Brexit, and that right there’s the problem, he’s part of the elite that doesn’t know 52 per cent of the country,” Friedman said.
Freidman said Trump had similarly tapped in to some very real worries of the US working class, about the impact of free trade and globalisation on their lives, that Australian policymakers and business leaders needed to understand.
“Even in Australia the immigration problem is fundamental,” Friedman said.
He said the boost delivered to US gross domestic product by free trade “sounded wonderful” in theory but chastised “elites” for failing to recognise that this economic benefit was not reaching working class people.
“The religion of free trade was killed on the day Lehman Brothers collapsed and everybody suddenly learnt what interdependence meant,” Friedman said.
“The move against internationalism is irresistible now.”
Friedman expounded on his theory that the relative international peace and prosperity of the post-cold-war, pre-Lehman Brothers-crash period, between 1991 and 2008, was an anomaly.
He said investors must accept the unpalatable reality that the economic troubles and political upset sweeping the US, Britain, Europe, Asia, Russia, and the Middle East is a trend that is here to stay.
“The ‘normal’ of the 20th century was war, near war, and economic depression…and now that normal has returned, and with it has come nationalism,” Friedman said.
President of US think tank The Global Aging Institute, Richard Jackson, said there was a real danger globally that ageing populations would lean away from globalisation.
“We have to guard against that,” Jackson said.
Former Prime Minister of Australia John Howard was far more optimistic about the outlook for western liberal democracies.
“With regard to the US election, whatever the outcome, I have no doubt that the American system will survive,” Howard said.
Howard told the ASFA crowd that they “should be proud” of the role the super industry plays in supporting Australia’s middle class which, he said, was a great stabilising force for the nation.