People born in the 1940s are getting tired and when they decide to finally quit the workforce will herald a change in the investment market as people start withdrawing money, Paul Keating told delegates at a Pimco client briefing yesterday.
"I was born in 1944, I'm 63, and most people my age just get tired, you know. I'm getting tired myself, mostly just of the Liberal party," Keating said.
"When you look at Europe, North America, and even eastern Europe. they're all subject to accelerated ageing and this will produce big net redemptions from the stock market."
Keating said super funds would see a change when that demographic tipping point comes and they had to meet the redemptions.
He said that the mass retirements would affect not only the top management but the next level down. Businesses are not getting the resourcing they need from the labour market and this will cause rises in real wages and wage inflation, he said.
Keating said he believed that the bull market which has been sustained since 1982 will reach its peak with the demographic tipping point occurring in 2008-2009.
"I'd say the cyclical high would probably be in 2008, this current business cycle will peak in 2009, with the market factoring that in 2008," Keating said.
"The kind of market people have been used to is about to change and if it changes, private equity will not look as flash as it has been.
"I don't think big fees in private equity will be sustainable unless we see a prolongation of this bull market."
