Hung parliament could bring risk for Aussie markets



Barclays research has highlighted the possibility that neither of the two major parties will be able to secure 76 seats needed to form a government, leading to a hung parliament and subsequent market risk.
Opinion polls since last year had shown a lead for Labor with the most recent Roy Morgan poll showing that 54.5% respondents favoured a Labor government, on a two-party preferred basis.
The research said this election might have a similar result as the 2010 election, when a minority Labor government sought support from Greens and independents.
“There is a strong push from independent candidates in several seats this time, mostly held by Liberals, hoping to benefit from dissatisfaction with the government,” the report said.
It said a risk for markets this year would emerge from a hung parliament or a minority government formed with the support of Greens or independents.
“A hung parliament could impede the passage of legislation or lead to the government being forced to pass laws that are less market friendly, especially if support from the Greens is required to form the government.
“For example, the Labor government of Prime Minister Julia Gillard with the support of Greens implemented a carbon tax in 2012. Labor, after switching leaders back to Kevin Rudd, changed its policy on the deeply unpopular carbon tax in the lead up to the 2013 election, which was won by the Coalition.”
The report also stated there was little difference in the policy agendas of the two parties in terms of economic impact.
“For the current election, there is little distance between the two major parties on jobs, childcare, aged care. While differences do exist, in terms of some taxes, timing of net-zero carbon emissions, the main aspects are similar. Fewer policy differences suggest less economic and market impact.”
Recommended for you
Financial advice practices may be hiring younger or professional year advisers as a succession option, but they may find they are unable to put up the capital if the adviser looks to retire.
Having completed its acquisition of fixed income provider FIIG, AUSIEX believes more can be done to increase direct investment of the assets and can envisage them being made more readily available on separately managed accounts.
Any changes to product labelling for sustainable funds must be applied consistently across investor channels, including those used by financial advisers, according to RIAA.
After eight consecutive weeks of adviser gains, the latest Padua Wealth Data analysis revealed adviser numbers have dropped as the profession begins to stagnate.