The accelerating rate of takeovers of ASX-listed companies and a two-year drought of new floats means Australia’s sharemarket will shrink this year for the first time since 2005, to the tune of $43 billion.

Top investment bankers and market strategists said the trend was being largely driven by the surge in mergers and acquisitions targeting local companies, particularly in the resources sector. Sydney Airport and Crown Resorts were the largest companies to be taken private last year, and Newcrest Mining is on the cusp of leaving the ASX this year.