The surprise Liberal Party of Australia (LNP) election win over the weekend should have significant consequences for the local market. We believe this is the case because many companies had previously priced in the impact of the (ALP) policy differences.

We note the following:

Property

Property developers and investor will be breathing a big sigh of relief given the proposed changes to negative gearing were impacting sentiment and creating uncertainty for investors. We expect conditions will now become more favourable and allow a bottom to be found in property markets.

No franking and capital gains tax

The uncertainty had likely kept cash on the sidelines which can now be invested with more confidence. Banks and other stocks with high fully franked dividends will be the beneficiaries but we caution that business fundamentals are more important than the franking benefit.

Sunday penalty rates

We expect a bounce in consumer sentiment as retailers now face less pressure on their wages and might benefit from the enhanced certainty that arises from no major policy changes.

As always, if you have any questions or concerns please let us know.