Analysts at Rabobank noted that Australia saw the governing Liberal party given a massive kick in the teeth over the weekend.
Key Quotes:
“The Wentworth by-election, which followed the resignation of toppled Prime Minister Turnbull, recorded one of the largest ever swings away from a government, and looks to have propelled an independent candidate into what was a Liberal seat for 117 years. Quite the political “boom”. As such, the Liberal-National coalition has lost its parliamentary majority; Australia looks on track for another election soon; and perhaps yet another prime minister – and maybe from the opposition Labor Party. Given Labor is talking about removing the negative gearing tax regime that props up much of the already-wobbly housing market, and that a local paper last week quoted researchers calling for a 20% drop in Sydney house prices over the next two years, which suggests 40% of mortgage borrowers in negative equity, I would image the AUD –perhaps even the RBA(?)– might notice.”
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