Australian poll surprise expected to lift market sentiment

MELBOURNE (Reuters) - The surprise re-election of Australia's centre-right government is expected to lift local share market sentiment on Monday, but an escalating U.S.-China trade war and concerns about slowing growth are likely to outweigh any gains.

The losing Labor party's proposals to eliminate dividend tax refunds and pare tax concessions on property investments had spooked the real estate sector, already suffering from a slump in property prices.

"With the return of the Coalition with its more pro-business policies and uncertainty now removed around changes to excess franking credits, changes to negative gearing and capital gains tax adversely affecting the property market and increased industrial relations regulation it's possible we will see a bit of a short-term bounce in the share market," said AMP Capital's head of investment strategy, Shane Oliver.

Oliver said bank, retail and property-related shares could be the main gainers.

Labor's plan to eliminate tax refunds on corporate dividends had spurred buying in big dividend payers, such as global miners BHP Group and Rio Tinto, on speculation they might beef up payouts ahead of the policy taking effect. Those positions might unwind on Monday.

The plan to end dividend tax refunds had boosted the attractiveness of real estate investment trusts (REITs) relative to stocks, as REITs do not get the dividend tax rebates.

Australia's largest private health insurer, Medibank Private Ltd, and NIB Holdings Ltd may get a lift, as Labor had planned to cap annual increases in health insurers' premiums.

Coal stocks such as Whitehaven Coal and New Hope Corp could climb as climate change activists failed to sway the polls much. Prime Minister Scott Morrison, a coal promoter, won in part due to strong opposition to Labor in the coal mining heartland of Queensland state.

Business groups and the power industry welcomed the return of the Liberal-National government but urged it to come up with a long-term energy and climate policy, after the conservatives scrapped a national energy guarantee plan last August under pressure from coal supporters on the right.

Without a more comprehensive policy, pressure is likely to remain on the top generator-retailers AGL Energy, Origin Energy and EnergyAustralia, owned by Hong Kong's CLP Holdings to keep power prices down.

(Reporting by Sonali Paul; editing by Richard Pullin)