Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ 2014 election weighs on equity market, First NZ says

NZ 2014 election weighs on equity market, may weaken business confidence, currency, First NZ says

By Tina Morrison

Dec. 24 (BusinessDesk) – The general election in New Zealand next year is starting to weigh on the nation’s equity market and is also likely to weaken business confidence and the exchange rate, brokerage First NZ Capital said.

The election, to be held between September and November 2014, is expected to be an extremely close result between a National-led government and a Labour/Green coalition, First NZ said in a note, citing recent political poll results.

“The potential formation of a Labour/Green coalition government is likely to weigh on the performance of the New Zealand equity market and is already starting to impact performance,” the brokerage said. “The re-election of the incumbent National-led government would likely be greeted positively by investors and give rise to a rebound in the market.”

Stocks most likely to be negatively affected by a change of government are in the energy utilities sector such as Contact Energy, Meridian Energy, MightyRiverPower and TrustPower as well as those with regulatory risk including SkyCity Entertainment Group and Chorus, First NZ said.

Those most likely to benefit from a change include exporters such as Fisher & Paykel Healthcare and Sanford which would receive an earnings boost from a lower exchange rate, while Fletcher Building and Methven would benefit from Labour/Greens housing initiatives, the brokerage said.

The attractiveness of New Zealand equities relative to other equity markets has already declined, reflecting the rise in political risk premium, First NZ said.

“There are risks of both a combination of either smaller inflows and/or greater outflows from domestic and foreign based fund managers involved in the New Zealand market,” the brokerage said. “Any such reductions in asset allocations to domestic equities could be expected to result in a less supportive New Zealand equity market backdrop going forward, together with a higher cost of capital for the New Zealand economy.”

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Stats NZ: Consents For New Homes At All-Time High

A record 41,028 new homes have been consented in the year ended March 2021, Stats NZ said today. The previous record for the annual number of new homes consented was 40,025 in the year ended February 1974. “Within 10 years the number of new homes ... More>>

Stats NZ: Unemployment Declines As Underutilisation Rises

The seasonally adjusted unemployment rate decreased to 4.7 percent in the March 2021 quarter, continuing to fall from its recent peak of 5.2 percent in the September 2020 quarter but remaining high compared with recent years, Stats NZ said today. ... More>>

ALSO:

Digitl: The Story Behind Vodafone’s FibreX Court Ruling

Vodafone’s FibreX service was in the news this week. What is the story behind the Fair Trading Act court case? More>>

Reserve Bank: Concerned About New Zealand's Rising House Prices

New Zealand house prices have risen significantly in the past 12 months. This has raised concerns at the Reserve Bank of New Zealand – Te Putea Matua about the risk this poses to financial stability. Central banks responded swiftly to the global ... More>>

Westpac: Announces Strong Financial Result

Westpac New Zealand (Westpac NZ) [i] says a strong half-year financial result has been driven by better than expected economic conditions. Chief Executive David McLean said while the global COVID-19 pandemic was far from over, the financial effect on ... More>>

MYOB: SME Confidence In Economic Performance Still Cautious

New insights from the annual MYOB Business Monitor have shown the SME sector is still cautious about the potential for further economic recovery, with two-in-five (41%) expecting the New Zealand economy to decline this year. The latest research ... More>>