The extraordinary non-outcome of the Federal election creates significant uncertainty for the Australian market. The balance of power now rests with a small handful of independent MPs who will horse-trade their way to extracting a major rural dividend for their individual electorates.

The 2010 financial year saw some material changes to Consolidated Media’s profile. The company sold its stake in Seek for a big profit and used the proceeds to instigate two separate share buybacks. The share register has tightened considerably with two major shareholders now owning two-thirds of the stock between them. The underlying earnings at Foxtel and Premier Media Group are performing strongly despite the GFC impact on subscriber growth. Both investments are undervalued by the market.

The Board of Wesfarmers provided a cautious nod of confidence toward the future by lifting the final dividend at its full year result. As the non-food retail businesses put in the hard yards towards efficiency and better service, consumers are keeping retailers on tenterhooks on their propensity to spend. That is creating a fragile outlook for profits in 2011 in the retail businesses. There’s no such hesitancy in the resources division where quarterly coal pricing is setting this business up for another bumper year.

The number one position in online employment advertising is driving operational leverage for Seek as the job ads market recovers. Seek’s normalised net profit after tax of $83.1 million for the 2010 financial year was 50% ahead of the prior year. Much of this represented a recovery in the job ads market generally, but also a consolidation of Seek’s leading position in the market.

A combination of volatile markets, structural change within the wealth management industry and perhaps the distraction of the AXA Asia Pacific takeover situation has overly complicated the view of AMP, driving what is in our view excessive share price weakness. When the dust settles on these issues, investors will still own a business with a strong market position in a growth industry. AMP has substantial operating leverage to rising markets, suggesting that investors with a contrary approach should be looking at this stock now.

Aftershocks from the financial crisis will remain with us for quite some time, but Westfield’s first half result to June 2010 clearly demonstrates that the worst is in the past.