Nats' victory 'a win for investors'

National’s decisive election win will be great news for the sharemarket this week, commentators say.

Monday, September 22nd 2014, 6:00AM

by Susan Edmunds

Milford Asset Management’s Brian Gaynor said the result removed uncertainty that had been lingering in the market.

There had been concerns about the potential effects of Labour’s proposed capital gains tax and the party’s proposed single-buyer electricity policy, and fears that the country could be without a government for some time if National or Labour had to cobble together a coalition to govern.

Gaynor said: “It’s obvious there’s a huge mandate for the National government, I don’t think anyone expected it to be so strong. There had been fears that Winston Peters would be in the middle in a controlling position spending months negotiating to get a property government but we have a clear government [today]. That will make investors very happy.”

He said it was hard to know how long the positive effect of the election result would linger in the market. “I think there’s probably 5% to 8% upside over the next few months… the electricity sector should have a good day [today].”

Mark Lister, of Craigs Investment Partners, said the business sector would be happy with the result. “The business community would on balance prefer to see the stability of the continuation of the National government, with policies they know and understand. I think you’ll get a bit of a spike in business confidence and sentiment and the currency will probably be up slightly.”

He said the sharemarket would perform well and it was likely that interest rates could increase slightly. Electricity companies’ stocks could also be expected to get a lift. “Although they have already performed quite well over recent weeks… there’s still a bit more strength to come there.”
But adviser Brent Sheather said anyone hoping to buy electricity stocks today to cash in on the National win had missed the vote.

He had heard from a new client that it was a strategy being proposed by some. “That’s a great strategy but it assumes no one else realises that National has won,” Sheather said. “What will happen is that electricity stocks are going to open higher immediately [today].”

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