Australia, Federal Election – Market

Posted: July 4, 2016 in Uncategorized

In August 2010 we had a similar situation as of election outcome. Julia Gillard, Labor, won with  72 seats  (also the Liberals had 72 seats)

The market lost 2.5% in the first three sessions and then recovered to finish up 10% at the year end (helped by  a strong US market).

Definitely the economy since 2010 is worst off – commodities crash, dis inflationary pressures.

Also the account deficit widened from A$5.6 billion to A$21 billion, leaving Australia more exposed to foreign funds flows.

So the 2010 performance cannot be expected, unless the SP500 pulls a really strong rally.

The big skeleton in the closet is the threat (or almost certainty) that Australia rating AAA will be lost before long with impact on both the Australian Dollar (under USD70) and the banking interest rates (with an upward pressure).

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