Election upside: These stocks could get a National-led boost

Retirement village and construction stocks could see a valuation boost if a National-Act-New Zealand First coalition formed after this weekend’s election and all parties got their housing and economic policies over the line, according to institutional research from Craigs Investment Partners.

“We would expect to see a more positive environment for the sector if there’s a change of Government,” head of research Stephen Ridgewell told Markets with Madison.

The market had not priced in all the potential upside for aged care that he’d assessed.

“Certainly the sector’s trading at below average valuations.”

The three parties would likely restore interest deductibility for property investors and shorten the brightline test, he said.

“[Those changes] would help support investor demand for houses that has fallen since that change in policy we saw from the Labour government in 2021.”

Without New Zealand First, the valuation gains for aged care and housing-related stocks could be larger, especially if a foreign buyer ban is rolled back and minimum wage increases stopped or slowed, Ridgewell said.

Labour’s increases to the minimum wage had put financial pressure on the aged care sector.

“The cumulative effect of six years of quite strong wage growth funding growth has been actually quite severe.”

Watch Ridgewell explain how a change in Government, in the direction polls suggest, could boost profitability for aged care companies, in today’s episode of Markets with Madison above.

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Madison Reidy is the host of New Zealand’s only financial markets show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.