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Australia

The Australian sharemarket

Australian equities, as measured by the S&P ASX 300, have performed well over the past five years, delivering annualised 5-year price gains of 5.39%, a figure that rises to 9.74% when dividends are taken into accountii. 

However, performance has differed significantly between sectors. 

Among the top performers, the Emerging Companies index, which tracks micro-cap stocks, has notched up annualised 5-year price gains of 10.54%.  

Emerging Companies enjoyed a significant rally in the second half of 2025, to achieve price gains of 51.95% over the past 12 months to January 2026iii. This was supported by lower interest rates and strong performances in specific industries including green energy and specialised mining.  

More broadly, Emerging Companies have attracted investor capital away from large-cap stocks, which are viewed by some investors as being overvalued.  

The Utilities sector has been another strong performer, recording 5-year annualised gains of 8.96%iv. These gains reflect rising demand for power, plus the appeal of healthy cashflows and high dividends that make the Utilities sector attractive to investors. 

By contrast, among the worst performing – and more volatile – sectors, Consumer Staples delivered 5-year annualised losses of 1.85%v, while the Energy sector could only muster up 5-year annualised gains of 0.32%vi

S&P/ASX Index comparisons of Price Returns last 5 years

Looking ahead

Australia’s sharemarket remains comparatively stable versus global markets, reflecting a larger cohort of mid-market companies and fewer megacap tech giants driving volatility.  

Overseas investors increasingly view Australia as fertile hunting ground, while listed companies, under pressure to deliver growth, are turning to acquisitions. 

In this environment, M&A activity will continue to influence performance more than organic expansion. 

Stock market performance has diverged

The broader Australian Securities Exchange (ASX) may have delivered robust returns over the past three years (5.64% annualised price gains1) but not all sectors have performed equally well. 

That said, a standout performer has been the Emerging Companies sector, which has recorded annualised 5-year gains topping 10%2 

What it means for your business

Australia’s favourable economic conditions including three cuts to the cash rate in 2025, have created conditions that can favour smaller listed companies.

Related sector analysis

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