Australia's equity market: The next 25 years

Twenty-five years ago, Australia's equity market looked very different. The S&P/ASX 200 Index had just launched and the country's growth story was largely defined by banks, housing, and natural resources when we launched Australia’s first ETFs—the State Street® SPDR® S&P®/ASX 200 ETF (STW) and State Street® SPDR® S&P®/ASX 50 ETF (SFY).

As we celebrate the 25^th anniversary for STW and SFY, we reflect on its front row seat to the Australian equity market’s story during its most significant evolutionary phase—and how that story may continue to evolve over the next 25 years.

ASX 200 launches and Australia’s first ETFs go live

When the S&P/ASX 200 Index launched on 3 April 2000, Australia was moving from a domestic, individual stock investing environment toward a more globally investable, institutional-relevant benchmark framework. The index was designed to measure the 200 largest eligible ASX-listed companies by float-adjusted market capitalization, making it representative, liquid, and tradable. Today, it is regarded as the key benchmark for Australian large cap equities and considered Australia’s preeminent institutional benchmark.

Just over a year later, STW and SFY were launched in August 2001 as Australia’s first exchange traded funds (ETF), giving investors transparent, low-cost access to the S&P/ASX 200 in a single trade. The timing mattered—the index began with a market value of just over $600 billion, with News Corporation being the largest constituent, and has since grown nearly 4.5 times to over $2.7 trillion in market value.³

From index to economic mirror: ASX 200’s 25-year evolution

The sector story of the ASX 200 over the past 25 years is not simply one of diversification away from banks and resources. It’s more accurately a story of banks and resources remaining at the core, while new growth engines have become more visible around them. As of 30 June 2026, ASX 200’s largest sector holdings were Financials at 33.33% and Materials at 25.54%, followed by Industrials, Consumer Discretionary, Real Estate, Health Care, Energy, Consumer Staples, Communication Services, Information Technology, and Utilities.⁴ That mix captures the structure of the Australian market: deep financial intermediation, world-scale resources, and a smaller but increasingly important set of globally competitive healthcare and technology franchises.

The same pattern is visible in the top 10. At the launch of the ASX 200, News Corporation was the largest company in the index, a reminder that the early benchmark still reflected Australia’s old media and conglomerate leadership. As of June 2026, ASX 200’s top holdings are BHP, Commonwealth Bank of Australia, Westpac, National Australia Bank, ANZ, Wesfarmers, Macquarie Group, Rio Tinto, Goodman Group, and Telstra.⁵ The leadership has shifted from symbolizing media scale to now being defined by resources, banks, infrastructure-like real assets, and select global champions.

This evolution mirrors the three major shifts the Australian economy has experienced over the past 25 years.

1. The mining boom: The Reserve Bank of Australia (RBA) describes the 2005-11 terms-of-trade boom as being driven by sharp increases in commodity export prices, especially iron ore, coal, and natural gas, as China and other emerging economies urbanized and industrialized.⁶ By 2011, Australia’s terms of trade were around 75%⁷ above the average of the preceding century, and mining investment rose from around A$20 billion in 2004 to A$130 billion in 2012, peaking at 9% of GDP. The result was a major reshaping of the equity market: BHP and Rio Tinto became enduring index heavyweights, while Fortescue’s rise exemplified how the boom created new large-cap winners. The RBA also notes that resource exports rose to more than half of total exports by the end of the 2000s, with mining revenue increasing from 6% of GDP in 2000 to 14% by the end of that decade.
2. Banking as a structural anchor: Australia’s listed banks have remained central to the ASX 200 because of the prominence of housing in the economy, household balance sheets, and credit creation. The RBA’s June 2026 economy snapshot shows finance at 7.7% of output, an average residential dwelling price of A$1.11 million, household wealth at 925% of income, and household debt at 177% of income.⁸ That helps explain why the major banks continue to occupy such large index positions: they are not merely financial stocks, but transmission channels for household income, housing wealth, savings, and the policy cycle.
3. Emergence of healthcare and technology as growth complements: Health Care remains a smaller index sector than Financials or Materials, but it has developed global relevance through companies such as CSL, Cochlear, ResMed, and Pro Medicus. Technology is still modest in index weight, with information technology at 2.12% of ASX 200 in June 2026, but companies such as WiseTech Global and Pro Medicus show that Australian-listed growth can increasingly be global, software-led, and intellectual-property driven.⁹ Australian Bureau of Statistics data also shows the broader economy’s rotation toward services. In 2024-25, private healthcare and social assistance increased operating profit before tax by A$6.0 billion, or 15.9%, and employment rose 5.7%.

The equity market has not abandoned its resource and bank DNA, but it has gained a broader set of growth signals.

What can investors expect over the next 25 years?

The narrative of Australia as a “lucky country” built on resource endowment is increasingly being tested in a world focused on the potential of AI. This requires investors to focus on Australia’s long-term trajectory, looking beyond cyclical factors to structural ones.

The next 25 years will depend less on what Australia produces and more on how efficiently it grows. The biggest challenge is not demand, but supply. Constraints across housing, transport, energy, and digital infrastructure are already putting pressure on costs and living standards and the only viable fixes are long term. Infrastructure takes time to build, and as a result, the supply/demand imbalance is likely to ease only gradually. That means inflation, especially in areas like housing and services, could stay sticky, and interest rates may remain structurally higher than markets hope.

At the same time, Australia faces a longer-term productivity challenge. Growth has increasingly relied on population and housing rather than efficiency gains. Issues like planning delays, skills shortages, regulatory burdens, and high project costs have slowed investment where it matters most. Fixing this is critical for making the economy more resilient and less inflation-prone over time The next 25 years could be defined by Australia’s ability to increase capital expenditure across energy, transport, and other advanced industries to help fill the productivity gap, deepen opportunities for listed companies, and support long-term earnings.

But a new generation of Australian companies is emerging, driven by technology and innovation. The next 25 years also could be shaped by a new set of growth drivers. Firms like Canva and Atlassian, along with listed leaders such as WiseTech Global and Pro Medicus, show that Australia can build globally competitive, high-value businesses. At the same time, increased private investments in data centers, AI and digital infrastructure will create ripples across the economy, especially when paired with structurally improving productivity.

One challenge for the Australian equity market has been retaining some of its most successful technology companies. The decisions by Canva and Atlassian to list overseas rather than on the ASX have led the ASX to introduce several recent measures aimed at making the listing process faster and more attractive for fast growing companies. This should help the ASX continue to evolve in line with how the economy is developing.

For investors, this suggests evolution rather than disruption. Banks and resources will remain core to the market, but new sectors like Technology, Health Care, and Infrastructure will play a bigger role over time. Meanwhile, STW and SFY will continue to provide a simple and affordable way to access this evolving mix through a single investment. As more innovative companies become part of the market, investors can participate in Australia’s next growth chapter through that same broad exposure.

How do ETFs play a part in this growth?

ETFs have firmly become the investment vehicle of choice for Australians. With roughly 2.7 million investors now invested in various asset classes through the wrapper, this structural shift shows no signs of slowing.¹⁰ The continued evolution of the ETF vehicle itself is driving momentum. ETFs are no longer synonymous with passive or index investing. They’re becoming the default delivery vehicle for all types of investment strategies. That said, the structural framework stays grounded in its core aim—low cost, transparency, and tax efficiency—and continues to drive more investors to ETFs for their core exposures.