MARKET TALK: History Against One-Term Aussie Government -RBS

10th Jun 2010 01:00

0000 GMT [Dow Jones] Though history suggests Australian voters will be reluctant to show door to first-term Labor government--despite what recent voter polls suggest--RBS analysts note resource and energy stocks, such as BHP Billiton (BHP.AU), Rio Tinto (RIO.AU), Fortescue (FMG.AU) will be clear winners if there is a switch to conservative Liberal-National coalition, with current government's proposed resource super profits tax likely to be scrapped. Telstra (TLS.AU) clear winner in telcos, with probable dumping of Labor's national broadband network. Key election issue is likely to be Australian sovereign risk, though RBS initial review of whether RSPT has increased sovereign risk has proved inconclusive; 1st key risk indicator, AUD/USD since tax unveiled May 2 suggests it has: local unit has fallen about 12% in that time, significantly more than the comparable basket of currencies. But 2nd indicator, market equity risk premiums, is far less convincing: while Australia's MRP has risen around 5% since May 2, that's at the lower end of a basket of MRPs, including the U.S., Hong Kong, U.K. and Europe. Still, RBS thinks sovereign risk likely to increase for future projects if RSPT brought in. ([email protected]) Contact us in Singapore. 65 64154 140; [email protected] (END) Dow Jones Newswires June 09, 2010 20:00 ET (00:00 GMT)