iPredict: National/NZ First Government picked for 2014

24 April 2012

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Key Points:

• Big change in Kiwi politics: National/NZ First Government now expected after next election
• Alastair Cameron set to become NZ Labour Chief of Staff
• By-election expected in Rongotai with Annette King set to stand for Wellington Mayor
• Slipper to resign as Australian Federal Speaker by 5 May but Gillard Government to hang on full term before defeat in Q4 2013
• Francois Hollande expected to win French Presidential Election by 8.46%
• Boris Johnson safe in London
• NZ Bridgecorp’s Petricevic and Roest each expected to be sentenced to at least five years jail, Steigrad at least three
• SkyCity pokie deal expected by Monday 7 May with 416 new pokies
• Crafar Farms to go unconditional by 2 June 2012 but more legal action picked
• Kim Dotcom picked to stay in New Zealand until at least 2014

Big Change in Forecasts for Next New Zealand Election

For the first time since the last election, iPredict expects National to win the next New Zealand General Election, most likely supported by the NZ First Party.

iPredict’s 6500 traders now believe there is a 57% probability of a National prime minister after the 2014 election, up from below 50% since 6 December last year and 47% last week.

However, according to iPredict’s stocks on forecast party votes (see below), a National-led Government appears possible only with the support of NZ First, led by former Deputy Prime Minister, Treasurer, Foreign Minister and Maori Affairs Minister Winston Peters.

The dramatic change in National’s prospects since the release of recent polls has led iPredict to today launch a bundle of stocks to forecast NZ First’s likely stance after the next election.

John key is almost certain to remain at the helm of National after the 2014 election, with an 86% probability he will be National’s leader on nomination day.

For his part, Labour leader David Shearer also remains safe, with a 60% probability he will be Labour’s leader on nomination day.

If there were to be a vacancy in either main party, Judith Collins is favoured to be National’s next leader (31% probability) and Grant Robertson is favoured within Labour (42% probability). An ally of Mr Robertson, Alastair Cameron, is overwhelmingly favoured to be Labour’s next Chief of Staff, with 98.3% probability.

Meanwhile, Labour MP Lianne Dalziel has an 89% chance of standing for Mayor of Christchurch next year and Annette King has a 64% chance of standing for Mayor of Wellington. There is a 60% chance of a by-election in Ms King’s Rongotai electorate before the next election and a new stock has just been launched to forecast the probability of a by-election in Ms Dalziel’s Christchurch East electorate. Former Labour Leader Phil Goff looks more likely to remain in Parliament – with just a 27% probability he will be New Zealand’s next Ambassador to China and just a 24% probability of a by-election in his Mt Roskill electorate.

Gillard Government Expected to Run Full Term Despite Speaker Sex Scandal

Across the Tasman, Julia Gillard’s Labor Government is expected to be able to present its Budget as planned on 8 May and go full term with a Federal Election not expected to be held until Q4 2014, the last legal option.

This is despite allegations of sexual harassment against its Speaker, Liberal Peter Slipper, who is expected to resign as Speaker before 5 May 2012 but not from Parliament.

When the next election is held, however, Ms Gillard appears doomed. While both Labor Prime Minister she (56% probability) and Liberal Party challenger Tony Abbott (63% probability) are expected to lead their parties into the election campaign, first preference expectations remain Labor 35.4%; Liberal 31.0%; Greens 11.9%; Queensland Liberal National 10%; Australian National 8.6% and Family First 4.7%. On a two-party preferred basis, the Coalition is forecast to win 51.7% of the vote and Labor 48.3%. Overall, the Coalition has a 78% probability of forming the next Federal Government.

International Economics

World growth expectations for 2012 are steady 3.26%.

Chinese growth expectations are 1.90% for Q2 2012, 1.96% in Q3 2012, and 2.06% in Q4 2012.

There is a 24% probability that at least one Euro member will depart the single currency in 2012, and a 40% probability the US Senate will formally approve a resolution of ratification of the Trans Pacific Partnership by July 2015

Early trading suggests the Australian economy will grow by 0.33% in the March 2012 quarter, 0.42% in June quarter, 0.42% in the September quarter, and 0.42% in the December quarter. Inflation is expected to be 2.16% for the March quarter, 2.13% in the June 2012 quarter, 2.13% in the September 2012 quarter and 2.13% in the December 2012 quarter, while unemployment forecasts are 5.19% for April 2012, 5.22% for May 2012 and 5.16% for June 2012. The country’s Cash Rate is expected to be reduced by 0.25 points on 1 May 2012, with no further increases for the remainder of the year.

New Zealand Economics

Fonterra payout forecasts for the next four years are down and with the payout now expected to be NZ$6.75 per kilogram of milk solids in 2011/12 (down 5c compared with last week), NZ$5.93 in 2012/13 (down 56c), NZ$7.42 in 2013/14 (down 4c), and NZ$7.50 in 2014/15 (steady). New stock has been launched for the Fonterra payout in 2015/16, and iPredict will report on it once trading volumes have increased.

Short-term New Zealand growth prospects have remained unchanged this week with growth expected to be 0.4% for the March 2012 quarter, 0.6% for the June 2012 quarter, 0.5% for the September 2012 quarter and 0.5% for the December 2012 quarter.

Forecast unemployment is also unchanged from last week, with the market still predicting unemployment of 6.4% for the March 2012 quarter, 6.3% for the June 2012 quarter, 6.3% for the September 2012 quarter and 6.2% for the December 2012 quarter.

Inflationary expectations have fallen over the past week. Inflation is forecast to be 1.3% for the June 2012 quarter, (down from 1.4%), 1.4% for the September 2012 quarter (down from 1.7%), and 1.5% for the December 2012 quarter (down from 2.0%).

91 unleaded petrol is expected to cost $2.19 per litre at the end of April staying there to the end of May, reducing to $2.18 at the end of June.

The Reserve Bank of New Zealand is expected to hold off increasing the Official Cash Rate (OCR) until December 2012, when it will rise to 2.75%.

Current account deficit expectations are 4.25% to March 2012, 5.05% in June 2012, 5.45% in September 2012, 5.84% to December 2012 and 5.96% to March 2013.

Contracts have been extended out to December 2013 for GDP growth, unemployment, Inflation, and the current account deficit. Commentary on these stocks will be included as trading increases on the NZ Economics page.

There is a 52% probability New Zealand and South Korea will sign a Free Trade Agreement before 1 December 2014

International Politics

French President Nicolas Sarkozy is heading for a thumping defeat, with an 87% probability Francois Hollande will beat him in the French presidential run-off election next month. Traders forecast he will win by a margin of 8.46%.

Across the Channel, London Mayor Boris Johnson has an 91% chance of winning the 2012 Mayoral Election, with 52% of the first choice vote. In national politics, the Conservative/Liberal Democrat coalition is expected to survive 2012 (82% probability).

In the United States, Mitt Romney is now expected to win all remaining Republican Caucuses and Primaries, after Rick Santorum withdrew from the race, and has 97% probability of being his party’s candidate for President. Barack Obama has a 99% probability of being the Democrat’s nominee.

On election day, the Democrats are expected to win California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Iowa, Maine (state), Maine’s Congressional District 1, Maine’s Congressional District 2, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin.

The Republicans are expected to win Alabama, Alaska, Arizona, Arkansas, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska (state), Nebraska’s Congressional District 1, Nebraska’s Congressional District 2, Nebraska’s Congressional District 3, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.

Across the country, the Democrats are expected to win 55% of the share of the Electoral College vote, and 52% of the popular vote, with the Republicans winning 45% of the Electoral College vote and 45% of the popular vote. President Obama has a 67% probability of being re-elected depite early trading suggesting that the US Supreme Court will rule his signature health reform policy, the individual mandate, unconstitutional.

In China, Wen Jiabao is now expected to remain Premier of the People’s Republic of China through to 1 January 2013. Yang Jiechi is expected to remain Minister of Foreign Affairs and Chen Deming to remain Commerce and Trade Minister. However, Zhou Xiaochuan is expected to be replaced as Governor of the People's Bank of China by year’s end, as is Xie Xuren as Minister of Finance.

In the Middle East, Syrian dictator Bashar al-Assad is expected to remain in power until at least 1 December 2012 while the probability Israel will launch an airstrike against Iran in 2012 is now 26%, down from 28% last week

Despite last week’s rocket launch failure North Korean dictator Kim Jong-un looks safe until at least 2020, and there is a 35% probability his regime will detonate an atomic device in 2012.

A new indexed contract, currently offering trades from $0.59, asks how great the maximum 21st Century sea-level rise will be according to the next assessment report by the United Nations’ Intergovernmental Panel on Climate Change.

Other NZ Issues

Pengxin Group’s bid for Crafar farms is predicted to become unconditional between 28 April and 2 June 2012. However the market believes that a judicial review will be filed against the April Crafar Farm decision, and that the Court of Appeal will hear an appeal on the decision by 1 October 2012.

The SkyCity deal is expected to be formally announced by 7 May, with traders predicting the government to allow SkyCity to have 416 new pokies.

The online predictions market also suggests there will be less jail time than that expected for the other Bridgecorp convicts awaiting sentence: Rod Petricevic (more than five years and six months); Rob Roest (five years); and Peter Steigrad (more than three years and four months).

ACC Minister Judith Collins is now expected to file defamation proceedings against Labour MPs Trevor Mallard and Andrew Little before 5 May (52% probability she will) and the market continues to give her only a 15% probability of winning damages within five years.

Efforts by the US Government to extradite Kim Dotcom from New Zealand are not expected to succeed until 2014 at the earliest, but the Swedish Government is expected to be more successful with its case againsts Wikileaks founder Julian Assange who is predicted to be heading for Sweden by July.

The market predicts that both an employee of the Ports of Auckland Ltd (other than Ricahrd Pearson, Rob Campbell, Wayne Thompson or Tony Gibson) and a contractor working for the port will be found to have leaked Cecil Walker’s details to blogger Whaleoil.

Despite recent media, early trading suggests that a Bill imposing plain packaging on cigarettes will not be given Royal Assent by 1 January 2013. A stock looking out to 1 January 2014 will be launched today.

Georgie Pie still looks no closer to being re-introduced in New Zealand. There is only a 28% probability it will be re-launched in New Zealand by Christmas 2012, a 34% probability that it will be re-launched by Christmas 2013 and a 43% probability it will be re-launched by Christmas 2014.

Excise duties are expected to be increased on tobacco and alcohol in 2012/13, although the market suggests petrol excise won’t be increased.

At MFAT, John Allen looks secure in his role with a 70% chance that he will stay on as CEO. However early trading on MFAT appropriations for 2012/13, suggests there could be cuts of up to 7.50%. Traders no longer believe that the New Zealand Police will experience cuts in their appropriations for the 2012/13 budget. No Commission of Inquiry is expected into the 2007 police raids on suspected terror activities in the Urewera district, nor are the ‘Urewera Four’ expected to be re-tried.

The Defence Force isn’t expected to announce an outsourcing of their payroll administration before 2013. The Auckland Council is no longer expected to add a new bin for glass collection, and the market doesn’t believe there will be an increase in the waste levy rate.

Detailed New Zealand Election Forecasts

Party vote forecasts for the next New Zealand General Election are now: National 43.5% (up from 41.6%); Labour 33.2% (down from 33.6%); Greens 10.3% (down from 11.7%); NZ First 5.1% (down from 5.2%); Conservative 2.7% (steady), Act 1.7% (steady); Maori Party 1.4% (steady); Mana Party 1.3% (steady) and UnitedFuture 0.9% (up from 0.8%). Act and Mana are each expected to win one electorate seat and the Maori Party two.

Based on these results, Parliament would consist of: National 54 MPs; Labour 41 MPs; the Greens 13 MPs; New Zealand First 6 MPs; the Maori, Act and the Mana Party 2 MPs each. There would be 120 MPs, requiring 61 to govern. The National/Act partnership would have 56 MPs while the Labour/Green/Mana group would also have 56 MPs, making Winston Peters, with his 6 MPs the kingmaker in the next Government. With the market now expecting a National Prime Minister after the 2014 General Election, it appears Winston Peters will do a deal with National. As mentioned above, stocks to test this are now available for trading at.

iPredict is owned by Victoria University of Wellington. Details on the company and its stocks can be found at www.ipredict.co.nz. The weekly snapshot is taken at a random time each week. This week’s was taken on the afternoon of Monday 16 April.

ENDS

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