Australian superannuation accounts set to tumble as share markets plunge globally

Australian superannuation accounts are set to tumble as share markets plunge amid growing recession fears in the US and Japan.

More than $100 billion was wiped off the value of Australian shares in the Monday rout, taking total losses to upwards of $160 billion over two days as markets plunged globally.

Tokyo’s stock exchange plunged more than 14 per cent on Monday and Australia’s market finished almost 4 per cent down as shares endured some of their worst days since the coronavirus outbreak in March 2020.

Super funds directly or indirectly own about a quarter of the shares and trusts traded on the Australian Stock Exchange.

And with more than 60 per cent of retirement savings exposed to Australian and overseas shares, fund managers fear the US and Japan market plunges will create a global bear market.

Worries have been aggravated by tumbles in speculation-driven technology plays and American consumer spending stocks after the US Federal Reserve decided last Wednesday not to cut official interest rates.

Talks of a manufacturing slowdown in the US, rising unemployment and a disappointing update from online retail giant Amazon further sapped confidence on Wall Street.

The tech-heavy NASDAQ index slipped more than 5.5 per cent in the last two trading days of last week, officially taking it into a correction, given it has now fallen more than 10 per cent since hitting a record high on July 10.

Australian shares have lost an average of 5.8 per cent of their value in two rugged trading days on the ASX.

But all this was eclipsed by a 19 per cent plunge in Tokyo over three days amid fears Japanese central banks could lift interest rates to fight inflation — and potentially drive the economy back into recession.

The fate of share markets is central to the retirement savings of millions of Australians given the heavy reliance on shares — which have starred in the 15 years since governments borrowed economies out of the global financial crisis.

At last official count at the end of March, almost 31 per cent of the $2.55 trillion held by Australia’s industry, corporate, retail and public sector super funds was invested in international share markets.

About 27 per cent of these retirement savings — or $688 billion — was recorded as being held by Australian companies, property trusts and infrastructure plays traded on the stock exchange.