The negative effects of the bear market are expected to be significantly worse if Labor wins office and Shorten and Bowen’s plans might have potentially dramatic implications for the equity and property markets, according to Wilson Asset Management’s chairman Geoff Wilson.
Further to that, the proposed plans might bring about the first economic recession in Australia for 27 years, he said.
Wilson reiterated that WAM was against Labor’s policy to scrap the current dividend imputation system and tax Australian shareholders twice.
“The ‘savings’ to be collected under Labor’s proposal will come from low-income earners and self-funded retirees with modest SMSF balances. Many of our 80,000 shareholders fall into this category and we will not rest until Labor drops the policy,” he said.
According to Wilson, the longest US bull market in history just entered its final stages while China’s equity market has fallen by nearly 30 per cent from its peak earlier this year and Australia has entered a technical correction.
“I believe we are in the final stages of the longest US bull market in history. What concerns me most is that all bear markets are extremely painful,” he said.
The firm also increased its listed investment companies’ (LIC) cash weightings to withstand increasing volatility and ensure necessary liquidity in its portfolios, which would help make it immune to the effects of an equity bear market.