NZD’s medium-term trajectory should not change - Nomura

Analysts at Nomura explained that while the Nationals retaining government is likely to be viewed positively by FX markets, the NZD’s medium-term trajectory should not change. 

Key Quotes:

"NZ First’s involvement and push for tighter immigration and the negative flow-through on growth, rather than the inflationary implications, should remain a focus, as could its protectionist stance on foreign ownership of New Zealand assets. Economically, the outlook for immigration is pivotal."

"Over recent years strong net migration has boosted New Zealand GDP, with annual growth on a per capita basis less positive.

By contrast, the “unknown quantity” stemming from a Labour, Greens and NZ First government should be perceived negatively, generating a more pronounced NZD reaction."

"Although Labour’s fiscal policy stance is expansionary, markets look set to remain focused on the push by Labour and NZ First to curtail immigration, albeit to differing degrees, restricting non-resident property ownership and possibly change the RBNZ’s monetary policy framework."