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[SYDNEY] Investors Down Under should keep a close eye on Saturday's election in New Zealand, a race that has already captivated currency markets.
That's the view from Morgan Stanley.
"Australian investors don't typically gaze across the ditch for risk events but our revenue exposure analysis suggests more NZ linkage than one might imagine," strategists led by Daniel Blake told clients in a note.
About 43 members of the S&P/ASX 200 benchmark get a "meaningful" share of revenue across the Tasman Sea, the strategists wrote.
Among the big four Australian banks that proportion is as large as 15 per cent, and a weaker New Zealand dollar will hurt profits, they wrote.
The kiwi has declined when polls favoured Jacinda Ardern's Labour Party, but there's been a rebound in the currency after the most recent survey showed that the ruling National Party has surged back.
A surprise victory for Labour, which may change migration, taxation and housing policies, will hurt home prices in New Zealand and may also have political implications in Australia, Mr Blake and his colleagues said.
"Housing policy changes under Labour will be closely watched, given the similarities with the Australian Labor Party platform," the strategists said, referring to the opposition in Canberra.