Many New Zealand stocks were seen to be in red in the early trading on October 20, 2017 post the latest announcement on the political landscape in New Zealand with Labour Party’s 37-year-old leader, Jacinda Ardern, being said to be the country’s next Prime Minister. This news led the NZ dollar touch grounds given the uncertainty lingering around the new government. The dollar was also seen to be slipping on October 20, 2017.
The confirmation has come from Winston Peters, NZ First leader, who announced that a coalition deal to form government with Labour has been reached with the backing of Green party. It has been stated that any deal to make the RBNZ target the exchange rate has not been secured. There are chances that the monetary policy be loosened given the fact that the new government might select a new RBNZ governor next year. Prime Minister-elect Jacinda Ardern is said to be the Pacific nation’s youngest leader in more than 150 years and her election is said to end the decade of centre-right National rule.
With this announcement, telecoms, healthcare and consumer discretionary stocks were seen to be the ones that dragged the Australian and New Zealand indices down.
In Australian trade, Telco - Spark New Zealand was seen to be among the top losers in the S&P/ASX200. In New Zealand trade, Ryman Healthcare and entertainment company, Sky Network Television were among the stocks that slumped.
This political scenario in New Zealand, which is otherwise an export-based country, has raised many concerns over coalition-favoured foreign ownership and curbs on migration that could impact the growth drivers for New Zealand. Further, the new government is viewed as not very pro in terms foreign investments in comparison to the National Party. This may make many foreign investors rethink about New Zealand as an investment destination now.
The developments on this front would be worth a watch going foward.
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