Karina Barrymore – Herald Sun, September 28, 2012

ALMOST half the stock in Australia’s listed companies is now owned by foreign investors as they scramble to escape volatility in their home markets.

Official figures released yesterday reveal foreign share ownership is at a 20-year high, with overseas investors owning 47 per cent of all shares for a total value of $550 billion.

“Foreigners are certainly in love with Australia. Not only do foreign investors hold almost half our listed shares they also hold almost 80 per cent of Australian government bonds,” CommSec chief economist Craig James said yesterday.

Elsewhere, locally based companies and households are increasingly turning to cash as their preferred investment sector.

According to the Australian Bureau of Statistics, companies now hold about 45 per cent of their assets in cash — a 22-year high — while households have almost 24 per cent held in cash, which is a 15-year high.

 It comes as another string of bleak economic developments in Europe fuels speculation the region’s debt crisis is back in full swing.
Spain’s borrowing costs are climbing again, France’s jobless queue has topped three million for the first time in more than a decade and Greek citizens are rioting over government cuts.Analysts say the turmoil is partly to blame for a slump in buy-out activity in Australia and throughout the world as the debt crisis prompts would-be buyers to shy away from credit.Separate research released yesterday showed the value of merger and acquisition activity so far this year in Australia was about $57.7 billion — down almost 60 per cent on the same period last year. It is the weakest tally for the period since 2009.This quarter, deal values have totalled less than $20 billion.

Bloomberg figures show companies have announced $446 billion worth of takeovers globally since June 30 — the smallest amount since the third quarter of 2009.

Andrew Bednar, head of advisory at at US investment bank Perella Weinberg Partners said: “Executives have the cash, but they don’t have the conviction.

“I don’t see any miraculous change in the M&A markets for the foreseeable future.”

European markets tumbled on Wednesday night, with key German and British indices off 2 per cent and 1.6 per cent respectively.

It came amid speculation some European nations would resist calls for Spain’s failing banks to receive direct funding injections from a new bailout package