Analysts see retailers and other stocks selling goods or services to consumers as the main sharemarket beneficiaries of Tuesday night’s incentive-packed federal budget.
Not hard to understand why when the budget reckons household consumption will rise more than 5% in 2022-23.
That plus the up to $11 billion in one-off cost of living ‘help’ from the government are the only parts of the budget seen having an impact on share prices.
More spending on infrastructure is long term and already factored into share prices, with many of the big operators and investors also unlisted or foreign-owned.
Retailers and car-related companies were popular tips – the car choices were odd seeing the fuel excise relief will only last six months and petrol will still be expensive because of high global prices.
UBS strategist Richard Schellbach said potential beneficiaries included Coles, fashion retailer City Chic, homewares store Adairs, fast food group Collins Foods, and Super Retail Group, which owns brands Supercheap Auto, BCF, Rebel and Macpac.
But to that you could add Woolies, Bapcor and Mosaic Brands, as some other analysts have done.
“We believe that this budget should help alleviate some of the cost-of-living pressures which have recently begun to weigh on consumer sentiment measures,” Mr Schellback said in a note to clients on Wednesday.
MST Marquee analyst Craig Woolford says the spending sugar-hit will be a boon for the nation’s retailers.
“Retailers often fear an election year will have a negative effect on retail. We doubt it this time,” he said.
“Without entering a political debate about the Budget, it is clear that both sides of politics will support households as we enter the pre-election phase over the next two months, which will help cushion retail sales risks.”
His buy ratings include Super Retail Group, Metcash and JB Hi-Fi.
UBS’s Mr Schellback said auto stocks would benefit from people driving more, and thereby spending more on parts and servicing.
Potential winners included fuel retailer Ampol, car parts retailer Bapcor, car dealerships Eagers Automotive and Autosports Group, and fuel supplier Viva Energy.
But in reality the budget will only last six weeks or until the end of the election campaign, with the fuel excise cut ending in September.
Retail sales have recovered strongly from the Covid Omicron lockdowns and restrictions earlier this year as the Australian Bureau of Statistics sales reports for both months has confirmed.
But with an election due to be called very shortly, consumers will become voters and show their now usual pre-poll reluctance to spend as strongly as they had been doing earlier in the year.
Citi analyst Adrian Lemme got it right when he wrote on Wednesday that while also the temporary cost of living measures in the budget would help retail, there would be a “headwind” to the sector when these policies ceased.
