The election stat doing the rounds this week looks like a gift to National. Craigs Investment Partners looked at the 12 elections since 1990 and found that NZ shares returned an average 9.3% in the year after polling day. The split is 11.7% after a National win and 5.8% after a Labour win. Investment adviser Jeremy Sullivan warned against confusing correlation with causation. Labour held office through the 1987 crash, the dot-com bust and the global financial crisis, and no Wellington government caused any of those.
He is right. Treating the gap as a verdict on party colour asks the wrong question. Markets can price a change of government without much trouble. What they struggle with is policy that changes the rules on capital after the cheque has been written.
The pattern is real, the cause is not
The tilt does show up again and again. Back in 2023, an analysis going back to 1957 found NZ shares produced average capital returns of +1.5% in the three months after a National win against -3.3% after a Labour win. The same work noted that high inflation and rising interest rates mattered more than the result, a point RNZ also picked up that year. Other analyses using CMC data point the same way.
All of that consistency tells you which party was governing when global markets went into a hole. It does not tell you that Labour’s policies dragged the NZX down. Interest rates, inflation and Wall Street explain far more of the gap than the colour of the Beehive.
The one time politics really did move prices
Koura Wealth founder Rupert Carlyon points to a far more useful case. In April 2013, Labour and the Greens were in opposition when they announced NZ Power, a single government buyer of electricity meant to cut power prices and generator profits. Contact Energy fell 10% in a day, and within a week about $450 million had been wiped off Contact, Trustpower and Infratil. The Crown then had to price the Mighty River Power float at $2.50 a share, below the $2.70 to $2.80 range it had expected.
NZ Power never happened, because Labour and the Greens lost in 2014. Investors who panic-sold locked in losses on a threat that was never carried out, while those who bought Meridian and Genesis cheaply did well.
The lesson is precise. The scare worked because it went after cash flows and asset values investors had already paid for, and it landed just before a capital raise. That is the mechanism worth fearing, not the scoreboard on election night.
A capital gains tax built not to reach back
On that test, this campaign looks tamer than the noise suggests. Carlyon notes that National is promising no property tax changes. Labour has ruled out touching interest deductibility, and its capital gains tax would apply only to future gains on investment property from July 2027. It excludes the family home, shares and KiwiSaver.
You can dislike a capital gains tax and still recognise good design. Grandfathering existing gains is exactly what NZ Power lacked. It lets investors price the new rule into future decisions rather than wear a hit on decisions already made. Labour looks like a party that learned from 2013.
Offshore money sees a sharper edge
International investors are less relaxed. Reuters reports that a single-term government now looks possible, something New Zealand has not seen since 1975. The concern centres on potential policy backflips rather than the simple fact of a government change, with a redefined Reserve Bank mandate named as a live fear.
That is the same point from a different angle. Foreign capital will tolerate a red or blue government. It charges a premium for a country where the rules swing every three years.
The economy does not stall for polling day
The real economy backs this up. Westpac senior economist Michael Gordon found average GDP growth in election years was 3.1%, slightly above the 2.8% long-run average since 1990. Cotality’s Kelvin Davidson estimated property sales run about 10% lower before an election but bounce back afterwards. Investor caution in 2023 traced to specific threats on deductibility and capital gains, not to the vote itself. ASB economists have made the same point that global shocks matter more than domestic politics.
Watch the coalition room, not the count
For business owners, capital raisers and anyone with KiwiSaver exposure, the question after 7 November is not who wins. It is whether the coalition deal keeps policy forward-looking. Watch for changes to the Reserve Bank mandate, any weakening of the capital gains tax’s grandfathering, and any revival of deductibility changes.
A single-term government, if it comes, will face pressure from smaller partners to go further and faster. Discipline on retrospective rules is what keeps New Zealand’s risk premium low. Lose that, and the sharemarket will notice far faster than any historical average suggests.
Sources
- Stuff: Labour vs National: Who is better for the sharemarket? And are there bigger issues to worry about? (2026-11-01)
- NZ Herald: Election won’t disturb investment markets (2023-09-30)
- RNZ: National victory may lead to positive capital returns of 1.5pc, report suggests (2023-09-13)
- NZ Herald: Stock Takes: Will the sharemarket perform better under a new Government?
- RNZ: Is an election really bad for the economy? (2026-07-07)
- RNZ: Is the looming election putting the economy on hold?
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