Left Wing Coalition impact on the market if any ?

[Beagle]

Today we see the Labour coalition getting down to business.
First few things they've done look "interesting"
Allowing Australians to buy existing houses in N.Z. when Kiwi's don't have that right in Australia, what's with that exemption ?
Comments that Port of Auckland will not be allowed to extend their wharf 13 meters into the Waitemata harbor, how do Ports of Auckland cope with bigger ships then ?
Asking the heads of all DHB's to resign seems pretty harsh too and Bill English agrees https://www.msn.com/en-nz/news/national/labour-already-a-brutal-government-bill-english/ar-AAulbPV?li=AAaeXZz&ocid=spartandhp
Poll out earlier this week that business confidence was impacted by the election and consumer confidence too if I remember correctly.

So...I figured maybe its time to gather some opinion now that we are probably faced with three years of this new left leaning coalition. How do you think they will impact the market ?

[hardt]

On the whole, left wing politicking is less forgiving of what markets love ( capitalism )...

The market would definitely be better off under National, but it is far from a catastrophe under Labour!

[Beagle]

Tony Alexander's very latest weekly pontification http://tonyalexander.co.nz/wp-content/uploads/2017/11/WO-November-2-2017.pdf

[minimoke]

Tony Alexander's very latest weekly pontification http://tonyalexander.co.nz/wp-content/uploads/2017/11/WO-November-2-2017.pdf
I started to doze off part way through - did I miss anything important?

[Beagle]

I started to doze off part way through - did I miss anything important?

LOL yes I nearly fell asleep too but I won't read it twice..no hope of 10,000 genuine new additional homes...just some fudging of the existing numbers...but I think we all knew that already. Surprisingly it would appear there is a chance they can plant 100,000,000 new trees per annum...probably do more for the environment than anything else anyone does unless Krakatoa erupts again in which case 100 billion trees wouldn't make as much difference.

[Snow Leopard]

...no hope of 10,000 genuine new additional homes...just some fudging of the existing numbers...

No worries. You will have thousands of skilled foreigners invading the country and building top-notch houses and stuff by the time you have crafted your reply to this post.

http://www.lookseebuildnewzealand.co.nz/

Best Wishes
Paper Tiger

[peat]

took two bites at the cherry to get through it.

He considers NZ property a buy and hold
doesnt think NZD will drop by that much
He doesnt actually answer his own question: If I Were A Borrower What Would I Do?
I'll assume that means do nothing.

[minimoke]

I'm going to revise my answer.

I did think a left wing coalition will have a slightly negative impact on the market. I haven't dipped my toes back in as planned as i had expected it to fall overall - what with an unknown coalition and then a confirmed left wing one. ( seems I got that one wrong!).

I don't think NZ property is a buy and hold. I think its a sell with risk of falling prices greater than benefit of higher prices. And with less investment in property the cash has to go somewhere - which is into the share market.

Oh - and as a borrower I would be looking at reducing debt as I see interest rate increase on the horizon - not big but given the asset / debt ratios people seems to be carrying in property its not a good place to be. Winston wont mind higher interest rates as his Older constituents with no mortgage and interest bearing deposits will benefit from higher rates.

[artemis]

I voted 'somewhat positive' for one reason. I predict a serious increase in rental properties going onto the market. If that happens there will be a lot of money freed up, much of which will stay in NZ - the market or the banks. The market is not highly liquid so money coming in will drive up prices. There will also be increased Kiwsaver as wages rise - again more funds into the market.

Changes flagged in the residential rental sector will have a cumulative effect on owners' finances, and also increase the hassle factor. One Wellington property manager was recently quoted in the news that he normally had 3 or 4 times the rental listings, mostly because rentals have been put on the market. Trademe vacancy ads in the year to April 2017 are well down in most urban locations - 65% down in Wellington.

Changes for landlords coming - new requirements for heating, insulation; increased tenant rights - including end of no fault terminations even if rental is sold and expectation of long term tenancies; possible 63 line item mandatory warrants of fitness where any item failed means the property cannot be rented out; end of offsetting negative net rents against other income; lots of subsidised housing promised putting pressure on values and rents; restricted immigration together with increased emigration to Australia; probable capital gains tax.

[moka]

So...I figured maybe its time to gather some opinion now that we are probably faced with three years of this new left leaning coalition. How do you think they will impact the market ?

Little impact I reckon, some companies will win a bit and some will lose a bit eg NZ$ changes but overall the market will continue on its merry way.

https://www.gobankingrates.com/investing/how-political-conditions-affect-stock-market/
How Do Political Conditions Affect the Stock Market?
Noise from markets or politicians shouldn't distract investors.

As a general rule, however, “politics have very little effect on the stock market other than short-term knee-jerk reactions,”
“The true driver of markets is corporate earnings growth,” Cavanaugh said. “If companies can continue to move the ball forward and continue to grow their profits, the market will follow."

[moka]

You don’t trade the markets, you trade your beliefs about the markets”. Van Tharp

http://behavioralmacro.com/15-things-global-macro-investors-should-have-learned-from-the-great-financial-crisis-and-aftermath/
(http://behavioralmacro.com/15-things-global-macro-investors-should-have-learned-from-the-great-financial-crisis-and-aftermath/)
15 Things Global Macro Investors Should Have Learned from The Great Financial Crisis and Aftermath
Mark Dow's microblog, analyzing global macroeconomic and market issues, often through the prism of our cognitive shortcomings.
13. Very few investors/traders can disentangle their political preferences from their economic analyses. Systematic traders, disciplined risk managers, and passive investors have a big advantage in this regard.

[traineeinvestor]

I see the new government as being largely negative for the market based on my expectation that:

1. corporate taxes will go up - affects how much companies have left to pay dividends and reinvest in growth
2. personal income taxes will go up - affects how much people have to spend and invest
3. indirect taxes will go up (e.g. petrol taxes) - inflationary and reduces money available for investment and consumption
4. reserve bank mandate may change to take into account employment levels as well as inflation - somewhat higher inflation is likely - not sure whether a changed mandate will be enough to avoid interest rate increases
5. higher costs on businesses - minimum wage increases, regulatory changes
6. some crowding out of the private sector due to increased government spending in areas like housing
7. lower immigration leading to lower demand growth + shortages in labour for some businesses + lower unemployment (offset to a greater or lesser degree by #8)
8. increased minimum wage leading to lower demand for unskilled and entry level workers - higher unemployment
9. increased regulations imposed on those providing rental accommodation - cost increases will push up rents
10. "free" tertiary education taking some people out of the work force - leading to lower unemployment + reduced supply of labour
11. weaker NZD (although external factors could outweigh domestic factors)
12. capital gains taxes through an extended bright line test are an irrelevancy for most investors and, based on experience in other markets, largely act as deterrent to people selling (i.e. reduce supply in the secondary market)
13. Kiwisaver will continue to provide a flow of funds into the market
14. a little bit nervous about companies which are vulnerable to populist complaints about predatory pricing etc.

On the whole, mostly negative but not disastrously so. Apart from MMH and (possibly?) NZR who should both benefit from the port issue, companies with overseas earnings/assets and in the tourism sector are probably best placed.

[Lewylewylewy]

Personally, I'm reducing my investment exposure on all fronts. The reason being that the new govt seem to make decisions based on feelings, without considering the implications of policy they generate. Those feelings are from the perspective of a whiny pleb (far left with tall poppy syndrome views, uneducated decision making, etc.). It's basically like putting a millennial in charge, oh wait... there is a millennial in charge! ...think about that.

I disagree that govt doesn't effect markets. They make policy that directly effects industries ability to make money or function as a business. For example, house prices are going down, yet they still feel it's unfair that people without money can't buy houses, so despite the prices on their way down, they're making additional policy that well push prices down (without researching the size of the impact). What's to say they won't thoughtlessly damage other markets. For example, what's to say they won't decide that they feel it's not right that retirement sectors take old peoples savings because it's stopping millennials getting their inheritance which contributes to people who have a right to party and go on holidays not being able to save a deposit despite house prices being low.

But hey, it could be all fine. Companies could just keep trucking. I'm just reducing my risk because I don't want my finances exposed to randomness. I'm annoyed that the opportunity cost of this action is great, but hope to be able to jump back in after they've excitedly generated all the policies covering their main feelings, and once I can see the effects play out.