ASX stocks that can win from a new capex ‘supercycle’ include Monadelphous, Graincorp, Ridley and Worley

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The twin peaks of population growth and Baby Boomer spending have insulated sharemarket investors against rate hikes. Now a new tailwind is emerging.

One of the great ironies of the five-year rally on Wall Street that has pushed the S&P 500 up almost 380 per cent is that capital has generally flowed to companies that don’t need much capital., whose most valuable assets are often intangible – brands, intellectual property and goodwill.

Schellbach says the tug of war between these pro-growth forces and the lagged effect of higher rates will continue, and the two-speed consumer economy isn’t going away. But while net migration will remain firm over the next few years, Australia’s moment of peak population growth is likely behind us, leaving a growth gap that needs to be filled.

To be clear, private capex has been strong for two years. A boom in hotel construction, the likes of which hasn’t been seen since before the Sydney Olympics, is underway. Capex intentions in the wholesale trade sector remain strong, pointing to demand for warehouses, while telco spending is as high as it has been for a decade, thanks to strong spending on 5G and fibre. Transport capex intentions are also strong, in large part due to large infrastructure projects.

 

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