Australia Macro Matters: Capex Pipeline Is Still Intact

Research evidence excerpt

Australia Macro Matters: Capex Pipeline Is Still Intact

vernment, particularly linked to capex, with A$53 billion in extra Source: Morgan Stanley Research

defence spending allocated, and A$15bn additional spending on energy security. Exhibit 2 : Recent updates across our key

There were also some medium-term positive housing measures (housing-linked capex drivers

infrastructure funding, new-build tax advantages), but we expect the near-term Capex Category Update

cyclical challenges are likely to be more important here. Defense A$53bn additional funding announced in Federal Budget

Global trends are also positive: Many of the capex drivers we highlight are global Energy Transition & Security A$15bn energy security package in Federal Budget

in nature, and we are seeing increased evidence of this across economies – helping Announced tax changes to negative gearing and capital gains

Housing (negative) likely to outweigh further supply measures (housing

to support the domestic pulse in Australia. We highlight recent work from our infrastructure fund) near-term

colleagues analysing the increased spending on energy security across Asia (A$5trn Resources CommodityA$1bn fundingpricesfor provideCritical MineralsadditionalStrategicsupport Reserve.for capex

in investments by 2030); an industrial super-cycle in the region (7% CAGR capex Unprecedented rise in computer equipment imports for March

Data Centres

growth); and a US economic outlook that favours capex over consumption, as AI signals data centre capex uplift underway

demand builds and broadens. Source: Morgan Stanley Research

Still expect domestic outlook to favour capex > consumption: While the

economic outlook has deteriorated in recent months, we think recent data, policy