Shares in Australia’s big banks rose sharply on Monday following the ruling conservative party’s surprise victory in the country’s general election, setting aside expectations of further financial industry reform promised by the opposition.
In morning trading in Sydney, Commonwealth Bank of Australia was up as much as 6.7 per cent, National Australia Bank 8.5 per cent, Westpac 9 per cent, and ANZ 7.7 per cent.
The positive reaction in finance-related equities came after Aussies voted to return Prime Minister Scott Morrison’s Liberal-National coalition government in a “miracle” victory in elections over the weekend. That win was despite the opposition Labor party leading the opinion polls for much of the last two years.
Bill Shorten’s Labor party had pledged financial industry reform if elected. Australia’s banks have set aside billions of dollars to compensate customers following a public inquiry into the country’s finance sector, which found wealth management companies had charged fees to customers without providing services, or charged fees to dead customers.
“The financials arguably have most to gain from a coalition government, given that policies like capital gains tax reform, negative-gearing reform, and (to a lesser extent) changes to dividend imputation will no longer be forthcoming,” said Kyle Rodda, a market analyst at IG Group.
“Rightly or wrongly, the banks had suffered from the expected implementation of these policies.”
Australia’s benchmark S&P/ASX 200 stock index was up 1.3 per cent on Monday, handily outstripping any equity gains seen elsewhere in Asia-Pacific. The Australian dollar was also higher.