A Labor victory would be good for banks, an Abbott Government would see mid-cap resource stocks spike, but the Federal Election itself is great news for the media sector, according to UBS Wealth Management’s review of the triennial Democracy Derby.
The Labor undertaking to increase the Superannuation Guarantee from 9 to 12 per cent would be a boon for the big four banks, UBS said, adding that AMP would also benefit despite its share price being weighed down of late over concern about the end of trailing commissions and the effect on its large financial planning network.
The scrapping of the Mineral Resources Rent Tax by an Abbott Government, meanwhile, would obviously benefit all mining stocks. although UBS said the hardest hit mid-cap miners may even rally slightly following a Labor victory, simply because uncertainty had come to an end in regards to the MRRT. Although UBS added that the likelihood of the Greens holding the balance of power in the Senate would be a further weight on resources shares.
Meanwhile in the unlikely event of a hung parliament, UBS forecast that “equity markets should be more volatile given there will be uncertainty in the short term. Using the UK as an example where the uncertain election outcome became apparent in the weeks leading up to the election, the FTSE100 index fell approximately 13 per cent into and post the hung parliament result.”
The one unambiguous winner from the election was the media sector, UBS said, with ad spend rising significantly in this contest relative to other recent elections, to the point where the major parties are having trouble securing all the airtime they want.