Axa chief investment officer Mark Dutton has joined an expanding group of experts warning of a cash tsunami about to hit the Australian share market.
Fund managers looking for a home for investment money should seize the opportunity to look globally, Dutton advised.
"The bottom line is that the money has got to go somewhere," Dutton told InvestorDaily.
"Inevitably, if the funds can't find a good sensible investment in Australia, much will go overseas. This is a good opportunity to diversify into global markets and reduce the bias to domestic markets."
The excess demand for equities is estimated at $44 billion for the 2007 calendar year, compared to $10 billion last year, according to a Credit Suisse report.
Strong demand from pension funds, private equity and the Government Future Fund has driven unprecedented demand in 2007, the Expensive but in high demand report stated.
Inflows to the Australian share market will total an estimated $81 billion, but there will be only $37 billion of new listings and capital raisings.
Credit Suisse estimates cash from net super inflows will be $12 billion, investment demand from the Government's Future Fund to be $5 billion, inflows of $3 billion as a result of the federal budget changes to super, $15 billion in merger, acquisitions and buy-out activities and $46 billion in dividends and buy-backs.
"This is a good opportunity to think about the relative allocation between Australian equities and global equities and consider whether it may be appropriate to use some of the extra funds to put into super into global funds," Dutton said.
Dutton added that Australian shares were no longer cheap in terms of price-to-earnings ratios compared with US, European and Asian markets.
