ASX on high as investors, business celebrate Aus election result

Australia’s big four banks have led investor celebrations on the sharemarket, which closed on a near 12-year high, after a surprise Coalition victory removed the threat of dividend imputation changes, increased regulatory scrutiny and capped premiums.

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Australia’s big four banks have led investor celebrations on the sharemarket, which closed on a near 12-year high, after a surprise Coalition victory removed the threat of dividend imputation changes, increased regulatory scrutiny and capped premiums.

More than $20 billion was added to the value of Australia’s big four banks in Monday’s trade, pushing the ASX 200 up 104.5 points, or 1.62 per cent, to 6564.7 points at 1615 AEST, while the broader All Ordinaries was up 120 points, or 1.89 per cent, to 6483.

The broader All Ordinaries ended up 1.89 per cent, at 6,483. Overall, about $33 billion was added to the value of listed companies. It was the sharemarket’s biggest post-election jump since Kevin Rudd won the election in November 2007. Shares in the big four banks surged by between 5.7 and 7.6 per cent, and health insurer gains hit double digits while the overall financial sector was up more than 5.1 per cent in what analysts described as a relief rally.

“Investors won’t need to work through the consequences of Labor Party’s proposed changes to negative gearing, franking credits and taxation scales,” CommSec chief economist Craig James said.

“With negative gearing now off the table, the medium-term outlook for housing is a little less negative,” JP Morgan strategist Ben K Jarman said.

“The question is whether the Reserve Bank waits for the ‘natural’ lifting of economic activity post-election or if it believes that an extra kick along is required,” Mr James said.

Closer to home, Business SA said there is no doubt businesses will be sighing with relief. “With the re-elected Coalition and the certainty around many policies having been previously announced, Business SA hopes that business confidence will return for the following quarter, but this is predicated on improving conditions,” Anthony Penney, Business SA’s executive director of industry and government engagement, said.

Civil Contractors Federation SA chief Phillip Sutherland said the electorate had delivered victory to the Coalition seeing them as “safe hands rather than the uncertainty created by Labor’s change agenda”. Master Builders Association of SA policy and communications director Will Frogley said the Coalition’s policies “focused on supporting new investment, productivity and economic growth, less tax and more support for small business”.

But Statewide Super chief investment officer Con Michalakis called for cooler heads once an overpriced sharemarket had settled.

“While quicker tax changes and housing market relief are welcome, the fundamentals of high household debt and slowing economy will need a sharper focus given the trade tensions between China and the US.

“The sharemarket gain is clearly a reaction to its overpricing changes ahead of the election results and we (as a super fund) will take a bit of profit from that (through our investments).

“But ultimately it will come down to Australia’s economic fundamentals,” Mr Michalakis said.