Stock market prices are on a bull run, but a number of analysts are predicting the market will drop below $40 per share this year, a level which is not sustainable.
Key points: The market has not gone below $30 since 2012, and it has only gone below that level once in the past 15 years (January 2016)Source: Australian Securities Exchange (ASX) market data, compiled by Bloomberg, is updated daily.
It comes as the Australian government is preparing to introduce a cap on the maximum amount an investor can invest in the stock market.
This would be the first such cap in Australia since the US.
Market analysts say the market’s performance is set to improve next year, but there is also the risk of another bubble bursting, which would leave the economy in a much worse state.
The ASX data shows that the last time a market price was above $40 was March 2017, which ended up with the stock price dropping to $30.
Market experts say that this is because the current price levels are too high for stocks to go back to where they were.
The current market price is set at $35 per share, while the peak was $50 in late February and early March 2017.
The current market is trading at a rate of around $34 per share.
The ASX said that the recent fall in the price of Australian shares, due to the government’s cap on financial support for stock trading, has been driven by the rise in the cost of borrowing and the negative impact on growth.
“As the Australian economy continues to recover from the global financial crisis, the cost-of-living is expected to increase and there is a growing risk that household incomes will stagnate,” the ASX market data report said.
“The increase in the annual cost of debt is expected in the next 12 months to be about $2.5 trillion, and the annual growth rate is expected be about 4 per cent.”
The market’s return to $40 is the lowest level seen since the ASIX began tracking it in 2011, when it was trading at $38 per share before the cap was introduced.
The Australian government has announced a cap of $2,500 per investor, and $4,500 for every employee.
The government has also been looking at other ways to help support the economy, including a levy on financial transactions.
While the ASEX data shows the market has been relatively flat this year since February, it also showed that the market had not gone under $40 since 2012.
The market hit a high of $35.92 in December 2012, then dropped to $34.10 by April 2013.