Who were the biggest winners from the budget? The ASX seems to think it’s tech
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Many sectors were argued to be winners from last night’s budget but only the tech sector is seeing substantially positive investor reaction.
Tech stocks have gained more than 2 per cent this morning while the rest of the ASX was more muted – the ASX 200 was down 0.22 per cent and while most other sectors were in the rest only property trusts were substantially down.
The only ASX tech stock rising after a win from the government today was cloud provider Sovereign Cloud Holdings (ASX:SOV), which trades as AUCloud and provides services to governments and critical industries.
Today it told shareholders it won a $3.1 million contract to serve the Australian Electoral Commission (AEC) for the next three years.
While arguably an afterthought in the context of the new government initiatives announced last night, nonetheless an important government service funded by the budget.
One stock gaining today that would have been watching the budget closely and tipped to be a winner well in advance was defence-tech play Electro Optic Systems (ASX:EOS).
The government has allocated $44.62 billion for defence which is 15 per cent more than last year’s $38.7 billion and represents 2.1 per cent of GDP. It also upped its forward estimates from $70.45 billion in spending in the next four years to $95.91 billion.
Clearly there’s demand in this space and today the company rose more than 10 per cent after confirming this demand – specifically higher revenues.
The company told shareholders it has received $43 million in cash inflows since April 1 and has over $100 million in value of completed goods positioned at the customer’s location ready for handover which will be come into the coffers by this year’s end.
While few other stocks rose today with anything to do with the Budget, the tech industry more broadly was judged to be a substantial winner, particularly AI and cybersecurity.
The government has pledged $1.2 billion or the Digital Economy Strategy which includes $500 million towards My Health Record and myGov.
$124.1 million has been committed to establish a National Artificial Intelligence Centre which will be led by the CSIRO and be supported by a broader network of AI and Digital Capability Centres.
$50 million will go towards improving digital security and $35.7 million will go toward emerging aviation technologies such as drones.
Tech companies will also be getting some additional tax relief.
It will also cut the corporate tax rate on income derived from patents beginning next year towards medical and biotech innovations.
From July 1, 2023 tech companies with depreciation costs will be allowed to self-assess their tax effective lives following the end of the current regime which allows full expensing.