Ham-fisted intervention in markets is dull thinking

Score one for protectionism, and minus several ranks of the economic freedom index for New Zealand, after the Government intervenes to prevent a Canadian fund from buying into Auckland airport.

When the market drops by 2% after a new protectionist law is created it should be obvious to everyone the impact of ham-fisted interventionist Government policy.

This law means that the Government has reserved the right to change investment rules on a whim, and so the risk of investing in New Zealand has just risen substantially. Foreign investors will apply a higher risk rating to NZ, and so will demand higher returns for their investments. That means less foreign money coming in, and ultimately, lower growth.

Is this what the govenrment is promoting? Lower growth?

There are plenty of ways to protect “strategic assets”. Changing the investment laws is amongst the worst of them.

Published by Lance Wiggs

@lancewiggs

5 replies on “Ham-fisted intervention in markets is dull thinking”

  1. Absolutely right Lance- NZ will be crossed off the list. The irony is that we would complain bitterly if the NZ super fund was mucked around like this.

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  2. A travesty indeed…
    I think the intent is right with regards to protecting offshore flow of what would have otherwise been NZ domiciled tax dollars by restricting the CCPIB’s planned issuing of stapled securities. But the mechanism is shoddy – and the timing is friggin appalling.
    Thus, the broader ramifications now far outweigh any gains that might have been there. If therey were to do this, the government should have done this a year ago, and with far more tact and guile – something they do seem to lack…

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  3. Lance, I don’t know where you stand regarding the government’s dismembering (splitting) of Telecom which is a private company, but please correct me here if I am wrong. I assume that you support the Telecom dismembering by this socialist government, and if that is your stand on that issue, then I think your comment here is inconsistent:

    you said…
    When the market drops by 2% after a new protectionist law is created it should be obvious to everyone the impact of ham-fisted interventionist Government policy.

    Aren’t both Auckland Airport & Telecom private companies? Why would you want to say that the government is an interventionist regarding the CPPIB attempt to buying shares in the Auckland Airport but not saying the same thing about Telecom?

    I am a defender of property rights, and the state has no right at all to meddle in the affairs of private businesses such as Telecom or Auckland Airport. That decision to sell or not to sell is entirely up to the rightful owners (ie, the Airport Shareholders) and not those Commissars in Wellington .

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