MARKET TALK: Aussie Resources Could Add 5% If RSPT Dumped-Trader

23rd Jun 2010 00:08

2308 GMT [Dow Jones] Major Australian resources stocks like BHP (BHP.AU), Rio (RIO.AU) could rise as much as 5.0% today if the proposed resources super profits tax were to be dumped by the Federal Government. Australian PM Kevin Rudd faces party leadership challenge from Deputy PM Julia Gillard, with vote due from 2300 GMT. "There's no question a challenge to Rudd's leadership is a positive because it potentially takes regulatory pressure off the market and could see a backdown on the RSPT," says UBS Head Of Sales George Kanaan. "Resources should outperform this morning but it's too early to say exactly what will happen." Says overnight SPI 200 futures only rose 0.2% because of lingering uncertainty as to the outcome of the challenge. "But we are adamant that Julia Gillard will get up today," says Kanaan. "If I was her, I would dump the RSPT completely but it's pretty hard to do because the whole budget is reliant on it. More likely, she will put it up for consultation. In that case, the regulatory pressure on Australia would be diluted and banks would also benefit." Says a complete backdown on the RSPT, while unlikely to be seen today, would be worth 5.0% on resources stocks and may half that much for the S&P/ASX 200. Index last 4486.1. ([email protected]) Contact us in Singapore. 65 64154 140; [email protected] (END) Dow Jones Newswires June 23, 2010 19:08 ET (23:08 GMT)