CGT scale back for property investors; tech stocks smashed; $US500b crypto sell-off

CGT scale back for property investors; tech stocks smashed; $US500b crypto sell-off

News in brief

It was a pretty wild day on the ASX yesterday. The tech stocks got hit while the commodity and energy players surged. The coal companies had a good day on the back of news that China opened a record number of coal fired power stations last year. The technology index on the ASX was off nine per cent yesterday and is off more than 17 per cent this year. There has been selling of tech stocks on Wall Street amid concerns that artificial intelligence could hit demand for companies’ products.

 

There are few signs that the federal Nationals and Liberals will reunite by the end of the week – a deadline imposed by Liberal leader Sussan Ley that if not met, would banish the Nats to the backbenches until the next election.

 

Billionaire Clive Palmer has revealed he has been in talks with members of the Nationals about the party’s future direction, hinting that he may be prepared to bankroll the party.

 

AustralianSuper, the doyen of the industry super fund sector, has reported net outflows for a financial year for the first time in more than two decades. The amount of net outflows - $250m in $400b in funds under management – isn’t much but it is a negative and shows members switching to other super funds. The figure reflects active switching of funds, not market performance.

 

Almost half a trillion dollars has been wiped off cryptocurrencies in less than a week as a selloff led by Bitcoin accelerates. Bitcoin in the past 36 hours has tumbled to its lowest level since US President Donald Trump won re-election in early November 2024 and ushered in a more crypto-friendly administration.

Fear-o-meter

The capital gains tax concession for property investors should be wound back or even scrapped. It is middle class welfare, not appropriate for today’s economy, with a housing crisis showing few signs of abatement.

 

Where there is smoke there is fire, and the CGT concession has again come up as a potential tax reform ahead of the May federal budget. It is a favourite of the federal ALP, and even though Treasurer Jim Chalmers is playing it down, it is clearly on the table for discussion.

 

Labor has been burnt. The policy helped them lose the 2016 and the ‘unlosable’ 2019 federal elections. But this time around they don’t need the support of the Coalition to pass the legislation.

 

It is an opportunity for the Albanese government to do some real tax reform.

Fear & Greed Q+A today

On ethical and green investing - and why it's growing up, not winding down:

 

“There’s nothing like a good hype cycle to get people excited, charge in blindly, and then realise it’s not as simple as everybody thought. We’re probably in what you’d call the trough of disillusionment. Things have been very quiet and there’s been a lot of pullback. If you look globally, sustainable investing was strongest in Europe for a long time and then spread out. Europe has pulled back a bit, the US has gone much further in the other direction. But Australia has actually held its ground. We haven’t seen massive outflows and we haven’t seen huge inflows either. It’s just been steady. And we think that’s interesting because it suggests people are still interested. They’re not abandoning it. It’s evolving, and where it evolves to will be the really interesting question. It’s less of the new shiny thing now and more something that’s becoming absorbed into investing more broadly.”

The federal government is considering scaling back the 50 per cent capital gains tax deduction for property investors – a key driver of the market. The AFR is reporting that the government is considering the move as part of what Prime Minister Anthony Albanese called a reform budget in May, though the change still needs to be worked through Cabinet and the Labor Party. The tax break was introduced during the Howard government, and economists, the Greens, unions, some independents and welfare groups have all supported paring it back. Significantly, after last year’s federal election, Labor could pass the legislation only with the support of the Greens.

Greed-o-meter

Company	Change (%)	Market cap ($)
Xero	-15.90	13.74B
Wisetech Global	-10.68	17.22B
Technology One	-10.47	7.41B
Macquarie Technology Group	-7.09	1.63B
Life360	-5.94	4.84B
Megaport	-4.91	1.93B
Iress	-4.02	1.47B
NEXTDC	-3.09	8.23B
Codan	-2.53	6.73B
Dicker Data	-1.20	1.79B

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The technology sector on the ASX was hammered yesterday following a sell-off on Wall Street, where investors are worried that AI could reduce the demand for products produced by software companies. Here are the largest share price drops yesterday among the ten biggest local tech stocks:

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Source: MarketIndex