Key points are as follows:
- Australian elections tend to result in a period of uncertainty which have seen weak gains on average for shares followed by a bounce once it’s out of the way.
- With Labor promising higher taxes, larger government and more intervention in the economy the May election presents a starker choice than has been the case since the 1970s & so suggests greater uncertainty for investors than usual.
- Labor’s higher tax and regulation agenda may be a negative for Australian assets, but this could be partly offset in the short term by more targeted fiscal stimulus.
- To return to decent wage gains requires a productivity enhancing reform agenda and much lower unemployment. This election is unlikely to deliver much on the former.
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