Investors Hang on for Election Decision
The unresolved Federal Election on the weekend has left the country with a hung parliament for the first time since the 1940’s and raises a number of issues for investors which include:
Super Levy – Labor is pushing for a 12% compulsory level which will favorably impact banks and investment funding pools.
Minerals Resource Rent Tax (MRRT) – The mining tax hangs in the balance with the Liberals promising to abolish the tax. Our miners will be directly impacted by this. Indirectly, the resolution of the MRRT will impact superannuation investment returns.
National Broadband Network (NBN) – Telstra stands to receive $11 billion from the Labor government if the NBN goes ahead, but the Liberals are promising to abandon this, thus hurting Telstra’s bottom line.
Banks – Are set to benefit from the 12% super levy. However, there may be concerns that a new government will turn their attention to imposing taxes on their super profits tax, which will negatively impact their bottom line.
Infrastructure – There may be some additional spending, or promises brought forward for infrastructure spend, to get either party across the line, particularly in regional electorates. This would positively impact our construction sector.
Gambling – Anti-pokie supporters may get a bigger say. This could negatively impact stocks like Crown, TabCorp and Tattersalls.
The final resolution of the elections is likely to take at least another week and this will impact the Australian market as a whole, as investors do not like uncertainty.
Obviously the ultimate outcome of the elections will have impacts on specific stocks. However at this stage experts cannot agree on who will emerge triumphant, so it is difficult to position your portfolio accordingly.
By Michael Hevern
Head of Research