Market downturn worries building, says APRA’s Wayne Byres

Regulator Wayne Byres says a sharp market correction is “possible”, with local shares vulnerable to offshore risks.

APRA’s Wayne Byres says things may be going well but they don’t stay that way forever. Pic: Britta Campion

Prudential regulator Wayne Byres says a sharp correction in financial markets is “possible”, with local shares vulnerable to offshore risks.

The chairman of the Australian Prudential Regulation Authority was appearing before a Senate estimates committee as the sharemarket slid to a 12-month low following a dive on Wall Street overnight.

“One of our jobs is just to remind people that when things are going pretty well that actually they don’t stay that way forever,” Mr Byres said.

“It’s been 10 years since the GFC, there are concerns building about whether markets are due for a correction,” he said.

Mr Byres said there were concerns about whether strong economic conditions around the globe could be sustained.

“Quite often the big problems from Australia come from offshore. There’s geopolitical tensions, there’s trade wars, there’s a whole raft of issues,” Mr Byres said.

“We’re moving into a world where interest rates look like globally they’re on the rise. When markets start to adjust there is a risk they do so quickly, unexpectedly.”

Liberal senator David Bushby asked Mr Byres whether the risk of a sharp correction was high or low. “I would describe it as possible,” Mr Byres said.

However, the APRA chairman pointed out that it was not obvious there was any immediate domestic economic threat. He said any official interest rate hikes from the Reserve Bank were likely to be gradual. He said unemployment was benign.

“Economic growth is solid at this point. There are always risks and issues in any environment,” Mr Byres said