Reuters logo
NZ shares dip after new government coalition formed; Australia flat
October 20, 2017 / 1:15 AM / a month ago

NZ shares dip after new government coalition formed; Australia flat

Oct 20 (Reuters) - New Zealand shares dipped and were on track to snap 13 straight sessions of gains on Friday, after the small, nationalist New Zealand First Party agreed Labour Party leader Jacinda Ardern to form a new coalition government.

New Zealand’s benchmark S&P/NZX 50 index fell 0.032 percent, or 2.58 points to 8121.49 by 0049 GMT. The benchmark gained 0.1 percent on Thursday.

Prime Minister-elect Jacinda Ardern would be the Pacific nation’s youngest leader in more than 150 years, ending a decade of centre-right National rule and spelling changes to economic policy.

”The market is definitely off, but it is not a massive fall and the volumes aren’t really high, said James Smalley, senior investment adviser at Hamilton Hindin Greene.

“The government that’s coming up has spoken that one of its main policies is certainly raising the minimum wage. Well, it’s not a good thing if you’re a company employing a lot of minimum wage workers because your cost is going to go up.”

Utilities, telecoms and consumer discretionary stocks dragged the index down.

Entertainment company SKY Network Television Ltd was the biggest loser on the index, falling as much as 3.9 percent to its lowest in over two weeks.

Telco Spark New Zealand Ltd and Meridian Energy Ltd both slipped as much as 1.7 percent.

Market participants worry that curbs on migration and foreign ownership favoured by the coalition could hurt two key drivers of New Zealand’s robust growth in recent years.

“The new government would be seen as less foreign investment friendly than the National Party, given New Zealand is an open, export-based country that relies on foreign capital,” said Smalley.

“There is a perception from foreign investors that we’re now a more riskier destination because of our change in government. More risk equals higher interest rates.”

Meanwhile, Australian shares were little changed even as base metal prices dropped, with the S&P/ASX 200 index inching up 0.1 percent, or 6.371 points, to 5,902.1.

Copper prices fell for a third straight day on Thursday, while prices of steelmaking commodities iron ore and coking coal also fell sharply, pressured by worries of declining demand.

Losses in materials, healthcare and industrial stocks were slightly offset by gains in financials and utilities.

Reporting by Christina Martin in Bengaluru; Editing by Eric Meijer

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below