Market Update - September 15

Posted by IFS on September 18, 2015

Australia has chosen another Prime Minister! Turnbull is promising a 'thoroughly liberal government' promoting freedom of 'individuals and markets' and promising to consult and explain the case policy change. It is clear that the Prime Minister-elect is targeting business confidence and individual freedom, in a step to reinvigorate the prominence of the 'small L liberals' within the party.

We outline the implications for markets below:

  • Turnbull will be seen as pro-business with the potential to boost confidence. A key criticism of Abbott has been his ability to sell the economic reform agenda. We expect the markets will be hopeful this will improve under Turnbull.
  • There should be an increase in short-term sentiment for markets as a result. Follow through will depend on actual policy delivery.
  • New leadership will allow a reset of budget priorities. They will not have to defend returning to surplus as aggressively and can present an argument to invest in infrastructure more aggressively to drive growth. To the extent that there is a change in fiscal policy setting this might result in less pressure on the RBA to continue to lower rates.

However we note there are a number of uncertainties that will need to be resolved in coming days including:

  • Liberal Party will now have to re-negotiate its coalition agreement with the National Party.
  • New portfolio allocations will be made in coming days in key portfolios such as Treasury, with government ministers indicating after the vote that Scott Morrison is likely to assume the position.
  • It is unclear which policies will be subject to change under a new leader.

It is also unclear whether there will be attempts from within the Liberal Party to destabilise the new leadership over time.

If you wish to speak to one of our Brisbane or Gold Coast Financial Advisers about reviewing your situation please contact us on 07 5562 2200.

 

This document has been prepared by DNR Capital Pty Ltd, AFS Representative - 294844 of DNR AFSL Pty Ltd ABN 39 118 946 400, AFSL 301658. It is general information only and is not intended to be a recommendation to invest in any product or financial service mentioned above. Whilst DNR Capital has used its best endeavours to ensure the information within this document is accurate it cannot be relied upon in any way and recipients must make their own enquiries concerning the accuracy of the information within. The general information in this document has been prepared without reference to any recipients objectives, financial situation or needs. Before making any financial investment decisions we recommend recipients obtain legal and taxation advice appropriate to their particular needs. Investment in a DNR Capital individually managed account can only be made on completion of all the required documentation.

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