No-one should invest on the strength of a handful of political opinion polls but enough evidence is emerging to cause smart money to start thinking about what Tony Abbott might do to your portfolio.
No-one should invest on the strength of a handful of political opinion polls but enough evidence is emerging to cause smart money to start thinking about what Tony Abbott might do to your portfolio.
Mining stocks are an obvious potential beneficiary of a change of government in Canberra on August 21. Death to the mining super-tax would be a significant boost to the miners, along with their support act, the mining service companies.
Telstra is another potential winner with an Abbott government likely to ensure that it plays a lead role in the future roll-out of broadband internet services rather than act as a bit player to the National Broadband Network.
Private medical services could also emerge as winners from a switch from left-of-centre policies to Abbott's right-of-centre approach, as could the stock with the ultimate exposure to a more active stock market, the company that runs it, ASX Ltd.
The sell side has an equal number of possibilities. Top of that list is commercial real estate in Canberra, the traditional winner from Labor boosting the civil service, and conservatives slimming it down.
Private education providers and construction companies might also find the going tough if migration numbers, and the intake of international students is limited. Retailers will have to wean themselves off loose government cash hand-outs.
By now, you get the idea but since investment advice is the province of licensed advisers that's probably about as far as a business-news website can go. It's sufficient to say that a change in Canberra equals a change on the market, not that a firm trend has emerged, yet.
What is a little more certain is that global markets do seem to be sensing change ahead as the U.S. and Europe seek to end their economic slide, and Asia powers along soaking up Australian commodities.
Boiled down, there is for the first time in two years, evidence of better times ahead. It will not, as we have sometimes seen in the past, be a straight line recovery, but it is a recovery.
Tell-tales which have some armchair critics getting excited include those bellwether base metals, copper and nickel.
While Australia has been fascinated by political antics in Canberra those two metals, which often play to role of early movers in both recovery and downturn, have been marching steadily north - just as stockpiles held in places such as London Metal Exchange have been marching south.
With copper, the price has risen from $US2.90 a pound three weeks ago to as high as $US3.39. Like the political opinion polls pointing to a possible Abbott win that 17% rise in the copper price is a snapshot which could be reversed tonight, and did retreat modestly last night as profit-takers clipped the top off the recent rise.
However, what adds to a belief in copper holding its higher price is the fact that the world is consuming the metal faster than it can be mined. At the start of 2010 there was an estimated 550,000 tonnes of copper in LME warehouses. Today there is 413,500 tonnes, a 25% decline in seven months.
But the number which stands about above all others in causing an outbreak of optimism came this week from the analysts at the investment bank, UBS. They reckon business investment in Australia will soar next year, growing at an annual rate of 12% -- four times this year's depressed growth rate of 3%.
It is unwise to pluck a single number out of the air and forecast sunny days ahead. The game is to look at the trend in financial markets, marry that with the trend in the political climate, and start thinking about re-allocating funds out of low-interest term deposits and bank bills, and start thinking about next year's direction of the stock and property markets.
