WHICH POLITICAL PARTY IS BEST FOR INVESTORS?
Mark Lister, 10 August 2020
Ever wondered which side of New Zealand's political spectrum has been friendlier to share investors and homeowners?
The blue team would probably be the winner in many straw polls. National is generally considered the better economic manager, as well as the party with an affinity for big corporates and a bias to those who already have wealth behind them, such as homeowners.
However, if we look back over the last 30 years of New Zealand politics - essentially the MMP era - the numbers tell a slightly different story. In fact, it has been Labour governments that have been kindest to asset owners.
We’ve had four governments since 1990, and all of them have presided over steady asset price growth. The NZ sharemarket has returned 9.4 per cent per annum since then, while national house prices have increased 5.8 per cent annually.
Each of those regimes has seen its share of ups and downs, with four recessions occuring in New Zealand since 1990. There was a fairly bad one in 1991, another in the late 1990s, then the GFC just over a decade ago, and the one we’re currently experiencing. All recent governments have experienced at least one of these periods of difficultly.
The strongest period for the housing market were the Helen Clark years, with national house prices gaining 7.9 per annum when Clark’s Labour Government was in power.
The best years since 1990 for sharemarket investors have been the last three - by a reasonable margin. Under Jacinda Ardern, NZ shares have increased at an annual rate of 14.9 per cent.
This could mean a few things, or nothing at all.
Maybe Labour governments have been better at managing the economy than they’re usually given credit for. Maybe 30 years of falling interest rates have overwhelmed any political factors. Maybe the sample size is too small. Or maybe, in recent times, there just hasn’t been as much between the major parties as in the past.
I’m no political expert, but there could be a bit of truth in that last point. Jacinda Ardern and Sir John Key probably have more in common than many of their fans like to admit.
Both are great leaders, classy orators, and have done wonders for New Zealand’s image internationally. Both have had to manage us through major crises as well.
However, neither has the appetite for major transformation, and both seem to prefer maintaining the status quo over rocking the boat. Perhaps that’s simply what a major party needs to do to hold on to the centre and it’s only the smaller parties with the luxury of offering a genuine difference.
Looking beyond September 19, maybe markets and the economy will do what they do, regardless of who is running the show. Maybe the workers, businesses, entrepreneurs, farmers and risk takers among us are far more important, and will make much more of a difference than politicians ever will.
Sit back, relax and enjoy the election campaign. It'll be entertaining, there'll be a few twists and turns, and someone will come out on top.
There will always be sectors that find themselves on the wrong side of policy changes, while some parts of society will benefit and others will be unaffected.
But should the election outcome cause you to rethink your investment strategy, and will it significantly impact your KiwiSaver account or the value of your house? Probably not.