Shaping Super 2026: Australian superannuation industry analysis 

Heading into 2026, markets feel uneasy for some investors. Geopolitical tensions remain elevated. Equity valuations are stretched. And AI technology is progressing rapidly.

At first glance, this might suggest an uncertain outlook.

But according to Brendan Hallett, Mercer’s Lead Market Strategist for the Pacific region, the global picture is more stable than current sentiment suggests. “The outlook is not as dire as a lot of market commentators are saying,” he notes.

From President Trump’s trade agenda proving less disruptive than feared to renewed infrastructure and defence spending in the eurozone, market conditions are becoming more balanced.

For investors in Australia and New Zealand, that balance matters. It creates space to look beyond the noise, focus on fundamentals, and consider how global shifts are translating into local opportunities and risks in 2026.

While market debate can often centre on valuations, a bigger force shaping 2026 is the structural change in the economy itself. And AI looks to have a significant role to play.

AI itself isn’t new. What is new is the speed, scale and commercial investment fuelling its growth. According to Hallett, that combination could boost productivity in ways not seen before.

“With the growth and the speed at which these technologies have grown, and the amount of capital expenditure, the potential productivity benefits could be huge,” he explains.

This spending is most visible in the United States (US), where AI investment has been both rapid and highly concentrated — helping fuel strong earnings expectations, and elevating valuations.

“The amount of AI spend and the opportunities this allows may outweigh the valuation story,” Hallett says.

China presents a contrasting picture. While Chinese AI development is also accelerating, domestic policy, market structure, and investor sentiment are keeping valuations more restrained. This divergence means investors may wish to consider geographical diversification within AI-related investments.

Hallett sees value in recognising those contrasts rather than viewing AI as a single, uniform investment category.

“Don’t put all your eggs in one basket – the US isn’t the only country developing good AI tech,” he says.

For investors, the takeaway is that it’s less about chasing headlines and more about understanding how AI investments are valued, their potential gains across industries, and their role in a diversified portfolio.

Global uncertainty continues to shape market views, but for local investors, some of the more meaningful shifts heading into 2026 may be playing out closer to home.

In Australia, several years of slower-than-usual growth is shaping expectations. Cautious households, restrained business activity and China’s economic slowdown all contribute to a more muted outlook. That may leave some investors conservative about Australia’s near-term outlook. Hallett sees that caution as understandable – but becoming out of step with emerging conditions.

Demand is starting to shift. As global inflation pressures ease closer to central bank targets, consumer spending is showing early signs of recovery. “This could be the year where we get slightly better economic growth in Australia than we’ve seen in the past,” Hallett notes.

The experience in New Zealand has been more pronounced. The country entered a deep recession in 2024 after the Reserve Bank of New Zealand tightened policy more aggressively. Interest rates rose higher and faster, with unemployment increasing more sharply than in Australia or the US.

“New Zealand has had it much tougher than Australia,” Hallett says. “But it’s starting to emerge from recession.” After recent rate cuts, we expect conditions to improve slightly in 2026, though against a backdrop of high unemployment.

These local shifts are playing out alongside uneven global growth. In our view, this reinforces the need for investors to reassess where growth and value may emerge in the near to medium term. This is what Mercer helps clients navigate in an ever-changing market.