Investors can expect sharemarket volatility to last for at least three years as food and energy prices rise and many developed nations struggle under massive public debt, the Australian Stock Exchange (ASX) boss says.
Chief executive Robert Elstone says it is almost impossible for market volatility to dissipate in the short term, with energy and raw material prices unlikely to abate in the absence of a global depression.
"I suspect it's at least got between one and three years of life," Elstone said yesterday as the ASX posted a 7.4 per cent rise in full-year net profit to A$352.3 million.
"People will have to adjust to that because it's obviously a function of systemically rising energy and food prices coinciding with very weak fiscal positions in most of the advanced, developed economies.
"I think the fear factor associated with either financial defaults - be they public or private in the banking system - is probably, as we saw in 2008, the biggest single driver of a global view that global financial risks are not receding," he said. "If anything they're greater now than they were 12 months ago."