New Zealand awaits final vote count as ruling bloc's lead stays razor-thin

what happened

Newly elected lawmakers in New Zealand are beginning to arrive at parliament this week, yet the country faces weeks of waiting before it knows who will govern. Preliminary results give the centre-right bloc led by Prime Minister Christopher Luxon 67 seats in the 131-seat house, just one above the majority mark. However, nearly 400,000 votes, around 15%, are still uncounted, and official results are due on November 27, Reuters reports.

Luxon and Labour leader Chris Hipkins have both said they will wait for final results before starting formal coalition talks. The centrist Opportunity Party, which entered parliament for the first time with seven seats, could become pivotal. Its leader Qiulae Wong has reportedly received calls from Hipkins and Green Party co-leader Chloe Swarbrick, according to Newstalk ZB.

Westpac chief economist Kelly Eckhold said markets would stay on edge while the result is worked out, with the exchange rate a particular focus. Finance Minister Nicola Willis lost her seat, which has raised questions about who will hold the post next and the direction of fiscal policy.

why it matters

For markets, the main uncertainty is the New Zealand dollar and the path of fiscal policy. Until the government's make-up is settled, investors are likely to remain cautious about New Zealand assets, and who becomes the next finance minister is a key open question.

market impact

NZ dollar: political uncertainty weighs on NZD until the government is formed

• ▼NZD/USD pressure down — prolonged uncertainty over the government and fiscal policy weighs on the currency

tags

instruments