Concerns about opaque structures, uneven underwriting, and constrained exit strategies in private credit markets are driving investors toward the safety and daily liquidity of ASX-listed stocks. According to Emanuel Datt, chief investment officer at Datt Capital, this shift creates a durable tailwind for quality Australian equities that is expected to persist into 2026. Datt Capital is a boutique Australian equity investment manager focused on identifying undervalued opportunities in the Australian market. The firm carefully examines companies and macroeconomic trends to find investments with growth potential.
Datt noted several factors supporting local equities over the next few months. He anticipates that companies boasting strong balance sheets, consistent earnings, and effective management teams with proven capital allocation records will likely outperform the broader market. These companies are viewed as safer havens amid the turmoil in private credit and offer more predictable returns.
Furthermore, Datt Capital is closely monitoring merger and acquisition opportunities where governance improvements, portfolio simplification, or credible cost programs can close the gap between a company’s intrinsic value and its market price, unlocking value for shareholders. The valuation difference between the Australian and US markets is also attracting strategic and financial buyers to Australia.
Australia’s relatively lower entry points, credible governance, and clear takeover regulations make it an appealing market for well-managed local companies, either as disciplined acquirers or attractive targets. Moreover, the recent framework on critical minerals and rare earths agreed upon by the United States and Australia is expected to lower the cost of capital for Australian minerals producers, providing further support to the local equity market.
