Australian Market Bets on Conservatives

Source:

"Bookies say conservatives are clear favorites to form government."

Australian financial markets bet on Monday that inconclusive weekend elections would deliver a change of government, ushering in a new minority conservative rule that would scrap a planned mining tax.

Australia looks likely to be in political limbo for at least another week, as the vote count drags on and as the incumbent Labour government and the conservative opposition compete to secure the support of independent and Green MPs.

But as Prime Minister Julia Gillard flew to Canberra and talks with independent MPs, some investors and punters were betting on her demise, driving mining shares higher on hopes that her proposed mining tax would fall with her.

"It's a hope and a prayer that things go the right way," said Analyst Lucinda Chan at Macquarie Equities.

The scenario of a minority conservative government rests on opposition leader Tony Abbott receiving a larger number of seats than Labour, and on assumptions that some of the independents are rural folk whose natural tendency is conservative.

But elections expert Antony Green challenged some of that thinking on Monday when he updated his computer-generated projections for the election result to put Labour and the conservatives would each end up with 73 seats in the 150-seat lower house.

Three independents and one Green MP would hold the balance of power in a parliament where 76 seats are needed for a majority.

Bookmakers say the conservatives are clear favorites to form government, with Sportsbet paying A$1.60 for an A$1 bet on the conservative Liberal-National coalition and A$2.20 for Labour.

Though new Green MP, Adam Bandt, has said he is more likely to support a minority Labour government than a conservative one, he and the independents are all under pressure to support the party that ends up with the biggest number of seats.

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