Poll Result An Each-way Win For Market
Sun Herald
Sunday November 18, 2007
SURELY there has to be some way of making money out of this election, apart from passing Go and collecting your tax cut, child-care rebate, home savings tax break and a computer for the kids.
Or placing a bet with Centrebet, though considering it's a two-horse race its odds are remarkably generous. When I last looked you got $1.31 if Rudd were to become PM or $3.50 if Howard is returned. Not sure what happens if Costello gets the nod in an 11th-hour coup, though.Anyway, those odds suggest a 76 per cent probability of Labor winning.But the prospect of a change hasn't fazed the sharemarket in the least, so that rules out any potential in trading futures contracts for the ASX 200, or bargain uranium shares to buy.Still, since both sides have similar spending promises, some sectors should be winners either way: retailers thanks to the tax cuts, anything to do with infrastructure, child care (ABC Learning Centres) and housing (Boral, CSR, James Hardie and OneSteel). Hmm, that's odd. Apart from the retailers, most of these stocks haven't been too flash in the past month.Perhaps the market has decided that, with an acute labour shortage caused by the mining boom, these new projects aren't going to happen anytime soon. Still, analysts also hold high hopes for wealth management - not because they think you'll need it, but because the banks, fund managers like AMP and Perpetual, and advisers such as Count Financial, WHK and Australian Wealth Management stand to gain from Labor's policy of getting super contributions (the 9 per cent levy plus voluntary payments) up to 15 per cent of low- and middle-income salaries. It appears the main way - indeed the only one Labor has mentioned - would be an "enhanced" co-contribution scheme.The banks and fund managers would also be winners from Labor's plan to halve withholding tax on foreign funds managed here, and don't underestimate how well that's gone down at the big end of town.Mind you, there's a conspiracy theory doing the rounds of Martin Place that, in return for hanging back on increasing their mortgage rate by the extra 0.25 per cent created by the subprime credit crunch, the banks could look forward to the Coalition looking more kindly on abolishing the "four pillars" policy preventing takeovers between them.For its part Labor publicly supports the four pillars policy, as has the Coalition in the past, for that matter.Most resource stocks would be unaffected by a change in government, since Labor has agreed to keep workplace agreements (AWAs) in the mining sector. But uranium is probably a no no.Telstra could go either way. It might get on marginally better with a new government - at least there's the chance of a dialogue, though don't get your hopes up. But the abolition of AWAs will hurt.And, don't forget, there's one other election result possible: a hung Parliament. Labor has to win at least 15 new seats to govern if it can woo an independent into the speakership.If it gets 14 it's a dead heat, after the speaker is appointed, a result that would send a shiver down the sharemarket's spine. If you think that's a possibility, then short selling is the answer. This can most easily be done through contracts for difference (CFDs). Then again, it'd be safer to get out of the market altogether and wait for the dust to settle.
© 2007 Sun Herald
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