Confidence surge with PM change

Chamber Talk with QT Better Business columnist Brett Kitching.
Chamber Talk with QT Better Business columnist Brett Kitching.

IT MAY be one small premature indicator, but the surge in the Australian Stock Exchange last week following the change of the Australian Prime Minister, is perhaps an indicator of the market seeking some certainty in relation to the Federal Government.

The announcement early in 2013 of an election in September of 2013 appeared to dull consumer confidence.

This is the norm when an election is called - consumer activity reduces before the election and then after the election there is a boost to economy wide confidence.

It seems that the changing of the guard for the sitting Labor Party had an effect of boosting economy wide confidence with the immediate measure being the strong boost to shares.

The question that is glaringly obvious on this basis is - why was the election called more than six months out?

The further question is why was this done at a time when the economy was showing signs of the beginning of a recovery?

As mentioned earlier, a sure way to dull economic activity for a period of time is to call an election. On the other hand, there is generally a boost to confidence once the election has been decided.

This gives great promise of good times ahead after September. There is genuine hope that the recovery which commenced early in 2013, will receive another kick start later in the year. A boost to consumer confidence is never a bad thing.

Perhaps this is a reason why major retailer stocks increased by around 5% last Thursday - perhaps punters are forecasting some better times in the second half of 2013 in the retail sector.


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Topics:  better business brett kitching chamber talk with brett kitching opinion

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