Should we worry about the election, or get on with it?

With the election less than eight months away now, investors are increasingly starting to think about what it means for the economy, asset prices and their portfolios.

In the months ahead we should expect the campaign to heat up, and financial markets to begin factoring the likely outcomes into prices.

Policy announcements will soon be coming thick and fast, giving analysts and economists a lot to consider.

Budget 2026 will be a key event in late May, while a few months after that we’ll be amidst the leaders’ debates.

We haven’t had a November election since 2011, with the four since then taking place slightly earlier in the year.

The later date isn’t surprising.

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Our economic recovery is still in its early stages and the incumbent regime will want to offer maximum time for things to improve.

Recessionary conditions, high unemployment and rising fuel prices are not a recipe for re-election.

That’s why there’s nobody hoping for an economic recovery and a calming of the Middle East tensions more than Christopher and Nicola.

If an election was held today, the current coalition could be in trouble.

The last five polls have National and Act averaging a combined 38 per cent, while the opposition bloc (Labour, the Greens and Te Pati Maori) is sitting at about 47 per cent.

Both groups might need the support of New Zealand First, which is polling at a healthy 10 per cent.

However, if things improve over the next two quarters, this could all change.

The Reserve Bank is picking the economic growth rate to improve, unemployment to decline and inflation to fall back into its target band.

The Official Cash Rate is firmly on hold and while a rise is possible before we go to the polls, the Reserve Bank sees early next year as a much better bet.

It’ll still be tight, but if all of that happens as expected there’s every chance we have another National-led government.

Uncertainty often prevails as an election approaches.

Businesses and consumers might sit on their hands, refraining from making any major decisions while the policy backdrop is up in the air.

That said, once they’re out of the way most firms refocus on the task at hand, 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’re going to encounter multiple different groups of politicians and policymakers.

Chances are you’ll be unhappy with at least one of them.

As investors, we need to adopt a similar attitude.

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 mostly delivered solid gains.

The sharemarket has increased under every government we’ve had since 1975, by varying degrees.

As for the housing market, it’s only this current coalition government that has overseen such as a weak period.

Given our housing affordability challenges it’s probably a good thing prices have gone nowhere since 2023.

There’ll be winners and losers beyond November, with some asset classes and sectors likely to fare better than others depending on the outcome.

For now, stick to your plan.

If your investment (or business) strategy is sound today, an election in November is unlikely to change that.

The election campaign will no doubt be entertaining, with the usual twists and turns.

However, there’s no need for a complete rethink of your investment strategy, nor should we let political uncertainty keep us on the sidelines. Markets have delivered solid returns under governments of all stripes, so we’re best to get on with it.

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