Hi thought this is relevent and affects us all this interesting info that clears up and sheds light on the affects of the carbon tax im a silent lynas junkie ''link provided Above ,Sorry if you dont think this is relevent article '' regards alan
This is Interesting Read, Appears The Scare Campaign Is Just That. The Actual Reality And Facts Are Very Mild Indeed For Shareholders Stockmarkets Mines And All Affected Bye This Carbon Tax ETC
Carbon tax will have a minimal impact on investment portfolios, according to a number of fund managers.
Despite the current noise surrounding the government's carbon tax proposal, managers believe such anxiety is rooted in fear and political hysteria than actual policy.
"There is a lot of political noise at the moment. The implementation of the carbon tax will not lead to the wholesale shutting down of mining companies," Celeste Funds Management's Andreas Stephens says.
"New Zealand has been able to implement an ETS [emissions trading scheme] and yet their economy did not collapse. We did not see any company collapses or businesses moving their operations offshore."
For Hyperion senior portfolio manager Joel Gray, "the fear of the carbon tax is worse than the tax itself, because of the politics involved".
"If anything, at least a level of uncertainty has been lifted. This is evident in the recent bid on Macarthur Coal (MCC) by Peabody. The bid is a reflection that business uncertainty has somewhat lifted," Gray says.
Another big fat tax?
A report from Goldman Sachs found the scope of the tax was considerably lower than expected and that the compensation to households and business is generous.
While the carbon tax will be largely borne by a narrow group of companies including the 50 largest polluters (who will be paying 75 per cent of the carbon liability), the impact on the earnings of the companies in the ASX 200 will be less than 0.5 per cent, the report said.
"From a business point of view, the impact on earnings will be reasonably limited over the next few years. The cost of the carbon tax on coal companies is less than $2 a tonne," Gray says.
At the same time, the price of thermal coal is well over $100 a tonne while coking coal is $200 a tonne.
"The significance of the impost is not large and therefore the flow onto households and consumers should not be massive," Gray says.
While Hyperion does not have significant investments in resources it does have exposure to large mining stocks including BHP Billiton (BHP) and Rio Tinto (RIO).
However, Gray says while these companies will face another cost pressure from the carbon tax, the impact won't be significant.
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He says a number of companies such as BlueScope Steel (BSL) are facing a lot of other headwinds that go beyond the carbon tax.
"There are a lot of reasons for the softness of their earnings. The carbon tax can't be positive for a company like that in the long term as they are big polluters. The transitional arrangements are trying to address that," Gray says.
Celeste Fund Management also does not have a big stake in mining companies despite being a small-cap manager. With resource stocks representing 40 per cent of the small-cap index, Celeste prefers to invest in companies that service the mining industry. Around 27 per cent of the firm's portfolio stocks are therefore exposed to the resources industry.
However, Stephens still does not see material impact on the portfolio from a carbon tax.
"You are only talking about a 1 to 2 per cent impact on firms, including coal companies. That level of impact won't cause these companies to shut down. Companies that service these firms won't see their customers disappear," he says.
Stephens' colleague Frank Villante says while there are a huge number of small-cap resource stocks, most of these companies are in the exploration phase and do not produce much carbon dioxide.
"These companies will have no impact from the carbon pricing," Villante says.
The announcement of the carbon tax has fuelled consumer unease. Last week, David Jones (DJS) chief executive Paul Zahra cited the carbon tax in the retailer's profit downgrade.
Investors Mutual head of investment research Hugh Giddy says consumer discretionary stocks could come under pressure from the carbon tax as consumers face higher living costs.
"The cost of living may go up. This won't exactly be great cheer for the discretionary retailers, who did well from the handouts during the global financial crisis," Giddy says.
While it's early days regarding the burgeoning opportunities in clean energy, Stephens and Grey say the carbon tax will help in the development of clean energy.
Both managers prefer to invest in companies with a proven track record. So, any new clean technology companies that do emerge would need to be operational for a number of years before they are picked up by these investment firms.
Stephens says if a price on carbon was implemented 20 years ago, "costs would have been less".
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"If we wait another five or 10 years, the cost will be higher. Now is probably the best time to put a price on carbon."
For Stephens, the critical factor behind the carbon tax will be in the way the government handles the implementation of the scheme.
Stephens hopes the carbon tax won't bring on any unintended consequences that are reminiscent of the government's pink bat scheme in 2010.
"The implementation of the carbon tax is a concern. I don't think the government wants to see certain industries collapse from the unnecessary strain following the tax," Stephens says.
"In principle, the pink bat scheme was a sensible strategy. However, it was poorly implemented. Hopefully, with this scheme, there won't be any unintended consequences."
LYC Price at posting:
$1.99 Sentiment: Hold Disclosure: Held
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