The Australian federal election finally concluded on the afternoon of September 7, after a tug-of-war lasting more than two weeks. Regarding forecasts for the prospects of Australia's financial markets following the election, Mr. Su Zhiheng, Chief Investment Strategist at KVB Kunlun International, was interviewed by Director Jiang of Xinhua News Agency's Sydney Bureau.

On the 7th, the Australian dollar opened higher against the US dollar but trended lower, ultimately closing at 0.9144, slightly below the previous day. The Australian stock market also fell 2 points from the previous day, closing at 4573 points. By the afternoon of the 8th, although the Australian dollar edged up to 0.9160 against the US dollar, the stock market fell another 36 points, with bank and mining stocks declining across the board. Given the deadlock between Australia's two parties and the uncertain political outlook, fluctuations and even declines in the Australian stock and currency markets are understandable. But once the Labor Party won the right to form a government and the political scene gradually stabilized, why did Australia's financial markets remain sluggish?

In the interview, Mr. Su stated that the Labor Party's new economic policies are unclear, while the Greens and independent MPs—who have allied with Labor and are playing an increasingly significant role—tend to favor "robbing the rich to help the poor," which is unfavorable for the future development of commerce and industry. Therefore, with undercurrents still surging in the political arena, investors' confidence in long-term investment remains insufficient. First, although the Labor Party barely secured the right to form a government by winning the support of independent MPs, it remains a minority in the lower house of parliament. "Such a minority government will face considerable resistance in operating going forward. Whether it can serve out its full three-year term is hard to say," Mr. Su said. Second, the Labor Party's continued rule means the mining tax will keep being pushed forward, and major mining companies can hardly escape their fate of higher taxes. In the first half of this year, amid a severe fiscal deficit, the Labor Party decided to target the highly profitable mining sector by levying a high mining profits tax. Many mining bosses remain concerned that, under the blow of high taxes, mining production and investment will decline across the board. Analysts predict that Australian iron ore and coal mining companies will pay a total of AUD 10.5 billion in tax over the first two years of the resource tax's implementation, showing that mining is Australia's largest source of foreign exchange income, and the tax hike measures will bring adverse effects to Australia's entire economic development. Third, Australia raised interest rates six consecutive times starting last October, placing enormous pressure on small and medium-sized enterprises seeking loans. Recent statistics indicate that lending amounts to Australian SMEs have noticeably decreased and their growth has slowed. Ninety percent of Australian businesses are SMEs; if they fall into difficulty, they will inevitably hamper economic growth. In addition, the US economy currently remains beset with difficulties, unemployment stays high, the shadow of the European debt crisis lingers, and the economy of China—Australia's largest trading partner—is also slowing its pace of development. All these factors determine that Australia's financial markets are unlikely to see any major improvement over the coming period.

Mr. Su believes that over the next few months, both the Australian stock and currency markets will enter a period of volatility. With political instability still present and insufficient momentum for economic development, the stock market will hover below 4700 points, and the Australian dollar will find it difficult to break through the 0.9330 barrier against the US dollar.