Banks, property, builders, health insurance and energy giants are all tipped to suffer under a Bill Shorten Labor government, according to Macquarie analysts.
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The Australian reports, assessing flagged Labor reforms to negative gearing and franking credits, as well as energy policy, Macquarie analysts said the impact of a Labor government was likely to be felt by the banks as well as utility and energy companies.
Nor would the property and building sectors be spared.
Proposed changes to negative gearing had the potential to impact the already fragile market, the analysts added, and while the effects on house prices was difficult to estimate, sentiment concerns could put further pressure on the banks.
“Fundamentally, banks are likely to experience a contraction in credit and earnings growth,” Macquarie said.
“With falling house prices, the benefit to investors from negative gearing has diminished, particularly when combined with the inability for investors to claim depreciation expenses on existing properties.
“Furthermore, if property prices were to decline while rents broadly remain unchanged, the implied benefit from negative gearing would be marginalised.”
Macquarie said the attractiveness of bank shares would be likely to diminish as a result of Labor’s proposed changes to franking credits, which could affect long-term valuations and prompt investors seeking high yields to look to infrastructure and REIT stocks, the Macquarie analysts said.
The changes, which would affect all shares held by investors in a zero or low-rate tax environment, could be more significant given retail investors’ overweight position to bank shares.
Macquarie said private health insurers would be impacted by Labor’s suggested 2 per cent cap on average premium price rises.
“The potential of capped pricing creates significant margin risks for the health insurance industry,” the analysts said.
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