Unless you spent the weekend camping out in Woop Woop you'll know that the federal election this weekend produced a shock in returning a Coalition government.
Political commentators attributed the Coalition's success to Labor's unpopular policy to halt franking credit cash refunds that was successfully painted by the Coalition as a 'retiree tax'.
The proposed ban of franking credit refunds also prompted a number of leading companies on the S&P/ ASX200 (ASX: XJO) to launch pre-election off-market share buybacks for investors as a way to distribute excess franking credits sitting on their balance sheets.
The likes of BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO), Caltex Australia Ltd (ASX: CTX) and Metcash Limited (ASX: MTS) all offered off-market buy-backs that can be particularly advantageous to investors in the retirement stage due to the capital gains tax treatment of proceeds and franking credit component offered in any dividend component of the offer.
More importantly, the election verdict means franking credit reforms for dividend investors are now permanently off the political agenda given Labor's humiliating smack-down on the issue.
This means fully franked dividend favourites of retail investors such as Telstra Corporation Ltd (ASX: TLS), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Australia & New Zealand Banking Group (ASX: ANZ) are all soaring in value today.
For the banks and other businesses like REA Group Limited (ASX: REA) the canning of potential reforms over negative gearing is also likely to help confidence in the property market, with REA shares 3% higher to $90.50 this morning.
The Coalition win also removes uncertainty for institutional investors who tend to sit on the fence in times of uncertainty and will now be keen to put significant amounts of capital to work in a more amenable political environment.
Sectors likely to do well include financials, property, and private healthcare, with operators like Medibank Private Ltd (ASX: MPL) up 10% today.
Foolish takeaway
Generally though it's stupid to make investment decisions over what government is in office as the basics of successful share market investing never change in that you have to find high-quality and growing companies on attractive valuations relative to their outlooks.
For example it may be a mistake to buy Medibank shares today just because you think the Coalition will spend less on Medicare to encourage Australians to seek out private healthcare. This may be true, but it's no secret, and Medicare's 10% rise this morning means the shares could now be overvalued relative to its outlook.
