Question 1: Why isn’t the team at Switzer alerting readers to the Government’s plan to tax super balances over $3 million?

Answer: We’ve published several articles on the proposed changes, but because the changes take so long from “announcement” to “law”, plus the changes only impact a minority of superannuants, it’s not a “burning” issue for many of our subscribers. Despite being announced almost two years’ ago, the changes are not yet law. The legislation is currently before the Senate, and it is not clear how the Senate (the independents who hold the balance of power) will vote.

The main sticking point is the potential tax on “unrealised” gains. This would essentially be a “first” in Australian taxation, and in some situations, sets up superannuants to pay tax twice (once on the unrealised gain, and then again on the realised gain). There is also some concern that the $3m amount is not indexed for inflation. There appears to be less concern about the tax itself – most Australians (according to the polls) support the idea that “wealthier” Australians pay higher taxes

 Question 2: I understand that the Australian share market is divided into 11 industry sectors. The weightings for each sector are different and change as stocks rise and fall in price and change relative market capitalisation. Where can I find out these weightings?

Answer: The benchmark index is put together by SPGlobal (formerly Standard & Poor). You can access data at spglobal.com

We have adopted the GICs system for classifying companies. At a high level, there are 11 industry sectors, with further sub-industry sectors. The weightings of the 11 main sectors are currently:

Financials 31.8%

Materials 21.1%

Health Care 9.4%

Consumer Discretionary 7.5%

Real Estate 6.9%

Industrials 6.9%

Energy 4.1%

Consumer Staples 3.9%

Communication Services 3.6%

Utilities 1.4%

Question 3: When is the next CPI due out? Is there a chance that the RBA could cut interest rates?

Answer: The September Quarter CPI (consumer price index) is due out next Wednesday (30 October) at 11.30am. Expectations are that the quarterly number will be around 0.3%, which will reduce the annual rate to 2.9%.

The trimmed mean (which it was the RBA looks at) is expected to be around 0.7%, with the annual rate falling to 3.5%. The RBA meets on Melbourne Cup Day. I think there is “next to 0” chance of a rate cut on Melbourne Cup Day.

Question 4: After the selloff in WiseTech (WTC), have the brokers reduced their target prices? Do they think WiseTech is now a buy?

Answer: There have been no changes to target prices (yet). According to FN Arena, the consensus target price for WiseTech is $121.96, about 15% higher than the last ASX price of $106.07. The range of targets is a low of $100 up to a high of $138. On recommendation, there are 2 “buy” recommendations and 4 “neutral” recommendations (0 “sells”).