Macro: Sandcastle economics
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Three winning sectors and one loser from the Australian Federal Budget
Jessica Amir
Market Strategist
Summary: Watch our three minute video covering the Australian Federal budget winners and losers. From the green transformation sector winning $20 billion in funding, to the building, construction and infrastructure sectors scoring a $10 billion pipeline of projects, to Australia's health and aged care sectors getting over $8 billion in funding. We cover the stocks that may be jagging investor attention. Meanwhile, the Government sees households doing it tough, expecting energy bills to rise 50%, which implies oil, gas, and coal companies will likely continue to garner investor attention.
Winner one; The green transformation sector. $20b will to be put toward helping Australia’s transition to net zero. Funding will going toward recently commenced projects on windfarms in Victoria and Tasmania, while also delivering cheaper infrastructure loans for renewable energy projects. Investors might like to look at companies in lithium, rare earths, hydrogen and uranium. Companies to watch might include Pilbara Minerals, Allkem, Lynas and Iluka.
Winner number two; building, construction and infrastructure. The government will establish a $10b housing Australia future fund, to provide 20k new social housing dwellings. On a bigger scale, The National Housing Accord plans to build 1 million new homes over 5 years, starting mid-2024. Plus, the government will allow eligible people to buy a house with a smaller deposit. Investors might like to look at stocks in the sector that could benefit, including Transurban, Adbri, CIMIC, as well as banks which may benefit from housing polices, including CBA, ANZ, NAB, WBC, as well as SUN, BOQ, BEN.
Winner number three; the health care and aged care sectors. The Government will spend $6.1b on hospitals, and extending COVID-19 support measures, so it’s worth watching companies in the sector including Sonic Health Care, ResMed, Healius, Australian Clinical Labs and Ramsay Health. On top of that $2.5b will be spent on improving aged care facilities and staffing issues. So keep an eye on aged care providers Regis, Estia and Japara.
The biggest loser is anyone paying an power bill, with energy prices likely to rise 50% over the next two years according to the Federal Government, as Australia is running short of energy. For some investors and traders, this offer opportunity. But for consumers, sadly it means more pain is to come. The Government's forecast follows a separate warning from an energy regulator, cautioning that energy prices will rise 50% in 2023 alone, as Australia is set to run short of supply. So it’s worth watching oil, gas, LNG and coal companies given profit margins are likely to rise. You might like to keep an eye on Woodside, WorleyParsons, Viva Energy, Ampol in oil and gas. And in coal New Hope and Whitehaven Coal. And for the energy sector, it’s worth watching ETFs like iShares Global Energy ETF (IXC) and Global The Energy Sector Fund (XLE).
For a global look at markets – tune into our Podcast.
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Sandcastle economics
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