NZ: Political and economic uncertainty looming - AmpGFX

The polls suggest that the populist NZ First party is gaining in the polls and will control the balance of power and be the kingmaker in the next government, notes Greg Gibbs, Analyst at Amplifying Global FX Capital.  

Key Quotes

“The hot button policy issues of rapid immigration and housing affordability are being exploited by NZ First.”

“The ruling National Party has held government since 2008 largely on the back of its own vote, with close allies, single member parties, ACT and United Future.  The prospect of a National /NZ First coalition or even a Labour/Green/NZ First coalition does not appear to have been given much thought by the market yet.  However, one of these two outcomes appears more likely.”

“NZ First is likely to hold the balance of power and will demand inclusion of some of its populist policy agenda for its support.  This is likely to include tougher restrictions on immigration and on foreign investment into the domestic property market.”

“The Labour Party has responded to the fall in its polls by replacing its leader in favour of its younger and more popular former Deputy, Jacinda Ardern. She may succeed in further drawing support away from the ruling National Party.”

“All parties have shifted in the direction of less immigration, and restrictions on foreign investment in housing.  However, Labour and NZ policies are more severe than Nationals.  The potential policy shifts on the housing market and immigration generate significant economic uncertainty.”