What the budget means for stocks
Budget – more winners
Lots of research out about the budget today with the consensus being that it’s bullish for many stocks and there is a distinct lack of losers – the market certainly felt that way today as it roared ahead. The basis of the budget is to invigorate a private-sector led recovery with getting people back to work a center piece. Here’s the lowdown from a sector perspective
Banks: Greater support for individuals and businesses will mean lower bad debts which is a positive for banks, offset to a degree by an outlook for lower interest rates which hurt margins: We remain positive the banks
Retailers: Tax cuts help discretionary spending while the prospect of a job / and security of employment are also key drivers for people to open their wallet: JB Hi-Fi (JBH), Harvey Norman (HVN), Super Retail (SUL), ARP Corp (ARP), Adore Beauty (ABY) – soon to list, to name a few.
Infrastructure: We covered infrastructure in today’s income note – click here, the upshot being that more money for immediate infrastructure development will help a broad cross section of companies
Property / Builders: The decision to extend first-home deposit plan should support property developers and residential builders like Stockland (SGP), Mirvac (MGR), James Hardie (JHX)
Miners: More infrastructure = more demand for raw materials while lower interest rates support higher dividend paying stocks, a current theme across the mining sector. BHP, RIO, Oz Minerals (OZL) and the like to benefit
Manufacturing: A plan to boost local manufacturing with a focus on healthcare should help Resmed (RMD), Cochlear (COH) and CSL, plus other companies like Bluescope (BSL)
One stock worth singling out today is Bingo Industries (BIN) which is held in our growth portfolio. They benefit from increased infrastructure spend, support for new house construction and finally a specific budgetary allocation to improving recycling volumes , a key growth area for BIN which has a suite of key assets in this area.
MM remains bullish BIN
Bingo Industries (BIN) Chart
There are a bunch of other beneficiaries and as suggested above, a distinct lack of losers.
A stimulatory budget, although it clearly needed to be. Lets see if it’s enough to get businesses spending again which will be key to the economic recovery.
