If you enter business or farming with a 10 or 20-year view, you should expect to encounter two or three different groups of policymakers and to be less than happy with at least one of them - investors need to adopt a similar view, writes Mark Lister.
If you enter business or farming with a 10 or 20-year view, you should expect to encounter two or three different groups of policymakers and to be less than happy with at least one of them - investors need to adopt a similar view, writes Mark Lister.
Opinion
The election is less than three months away, the campaign is heating up and political experts are speculating on what the make-up of our next government will be.
According to Australian betting exchange Betfair, change is coming.
A National victory is offering short odds at just over $1.40, while Labour is paying more than $3.00, making the incumbent leadership very much an outsider.
This shouldn’t be a huge surprise given our sluggish economy, the high cost of living and the steepest mortgage rates in 15 years.
Law and order is a weakness in the eyes of many, while Chris Hipkins has had plenty of internal issues to deal with during his relatively brief tenure as Prime Minister.
Despite all that, it could still be a tight race.
Recent polls suggest there isn’t much between National and Act on one side, and the combined support for Labour, the Greens and Te Pāti Māori.
Recent transgressions could change things, but any votes Labour loses might simply move to its support partners, rather than across the floor.
I suspect the two big parties are disappointed in how they’re tracking, with both National and Labour polling below the average levels of popularity from the past decade.
Act continues to resonate with those who want change but haven’t warmed to this version of the Nats, while the Greens have enjoyed more consistent support than most.
Te Pāti Māori could be one to watch, as it might just poach a few left-leaning voters who believe its larger counterparts aren’t going far enough.
If we do see a change in October, this Government would’ve had the shortest tenure since the 1980s, despite achieving record support during the pandemic.
For the economy, uncertainty always prevails as an election approaches. Businesses tend to sit on their hands, refraining from making any major decisions while the policy backdrop is up in the air.
However, once they’re out of the way, most firms simply get on with things, rather than letting the political landscape derail their plans.
After all, if you enter business or farming with a 10 or 20-year view, you should expect to encounter two or three different groups of policymakers.
Chances are you’ll be less than happy with at least one of them.
As investors, we need to adopt a similar attitude.
Mark Lister is an investment director at Craigs Investment Partners.
Looking back through history, investment returns in New Zealand have been reasonable under most governments.
Some periods have been more lucrative than others, but shares and house prices have delivered solid gains, irrespective of who’s been in Parliament.
We have to go back 50 years to find a government that’s presided over a negative return. Under the six we’ve had since 1975, both asset classes have increased over the course of every tenure.
That’s not to suggest there won’t be winners and losers beyond October, because some sectors will fare better than others depending on the outcome.
The electricity sector famously found itself in the firing line ahead of the 2014 election, when Labour and the Green Party proposed significant changes to the industry.
We need to monitor potential risks or changes, but we should also remember good-quality assets and great businesses can perform well regardless of who’s in office.
It’s not always wise to make wholesale changes to our investment strategy on the basis of politics.
If you think that sounds naïve or if you’re particularly uncomfortable with where the country is headed, your best option is to simply put more of your investment capital offshore.
Business owners, farmers and workers don’t always have that luxury, but share investors can hedge their bets quickly, easily and cheaply, if they so desire.
Just remember that Australia, Europe and the US all have politicians too, and theirs aren’t necessarily any better than ours.
Mark Lister is an investment director at Craigs Investment Partners. The information in this article is provided for information only, is intended to be general in nature, and does not take into account your financial situation, objectives, goals, or risk tolerance. Before making any investment decision, Craigs Investment Partners recommends you contact an investment adviser.
