Global markets, geopolitical risks a concern: ASIC’s Longo

The nation’s top corporate cop has revealed his concerns about global markets and domestic investment as the US prepares to launch fresh tariffs on trading partners.

ASIC chair Joe Longo says he is worried about the current global turmoil and impact on markets. He is pictured alongside ASIC commissioner Simone Constant. Picture: Paul Jeffers

Australia’s top corporate cop has revealed his concerns about global markets and geopolitical risk, as the US prepares to launch fresh tariffs on its trading partners.

“I am a bit worried about global markets at the moment. What’s going on in the US is clearly extraordinary. Overall, I do worry about the state of markets and geopolitical risk in general,” Australian Securities and Investments Commission chair Joe Longo said at an Australian Council of Superannuation Investors conference in Melbourne on Wednesday.

“From a regulatory perspective … do we leave the markets to their own devices? Or is there a role for the state to pull levers to say no, we need to be standardising that approach to valuations, or we need to be raising expectations on some element of corporate governance.”

Mr Longo was speaking as countries around the world brace for Donald Trump’s ‘Liberation Day’ later on Wednesday (Thursday AEDT), which will see the US president slap reciprocal tariffs on its trading partners.

Since President Trump took office in January, markets have been in flux: the Dow and S&P 500 are both down around 7 per cent while the tech-heavy Nasdaq is down 12 per cent. The ‘Magnificent 7’ tech stocks, the darlings of 2024, have been the hardest hit as investors gauge the elevated prices through a global risk lens.

Asked what keeps him up at night, Mr Longo put AI on the list along with the current global turmoil as he pointed to the importance of good governance from companies.

“Even without the (geopolitical risks), you have consequences and implications around AI, which I try to spend as much time as possible trying to understand, and I think really is a major game changer,” Mr Longo said.

US President Donald Trump’s ‘Liberation Day’ reciprocal tariffs have the potential to rock global markets. Picture: Brendan Smialowski/AFP

He also cautioned Australia is running out of investable assets for super funds, as he attempts to reassure the industry regulation does not necessarily mean more rules.

“Superannuation trustees have to act on the best financial interests of their members, and we’re a relatively small economy, we’re running out of investable assets — we’re not running out of assets altogether (but) from the point of view of what the superannuation sector is trying to achieve, the (Australian) public markets have probably topped out,” Mr Longo said.

Turning to ASIC’s focus on public and private markets, Mr Longo said the line between public and private had blurred and the regulator needed to better understand what’s happening in the more opaque private markets. But, he is not necessarily looking to put in place more onerous rules, he said.

“I do have an open mind, I don’t go into this exercise wanting to regulate where it’s not needed. If anything, I’m into simplification.”

Still, ASIC is worried the next crisis could come from the private market segment, at a time when Australia’s largest investors, the super megafunds, are pumping people’s retirement savings into these ­vehicles, which include property, infrastructure, private equity and private credit.

“I can’t do my job in the dark, and we can’t have an intelligent discussion as an economy, certainly as a regulator, without having more transparency,” Longo said last month when he launched the regulator’s report into public and private markets.

“There are some elements of the private markets that are a little bit defensive about this, that don’t like being questioned. Well, you know what? We’re the regulator, and it’s in the public interest. It’s in everyone’s interest for us to know what’s going on in the private market.”

The nation’s two largest funds — AustralianSuper and Australian Retirement Trust — already have close to a quarter of their assets in private capital and are increasing their exposures. That’s roughly $80bn for AustralianSuper and $70bn for the slightly smaller ART.