An analyst says New Zealand companies with exposure across the Tasman could face a more challenging trading environment as the Australian government unwinds stimulus packages.
The head of private wealth research at Craigs Investment Partners, Mark Lister, says Australia has successfully boosted the economy with its aggressive level of stimulus - which included record low interest rates.
The Australian government's $42 billion stimulus package included measures such as increased infrastructure spending and cash handouts to most Australians to boost consumer spending.
However, Mr Lister says companies in New Zealand and in Australia will be affected now that it is being withdrawn. Firms that are more reliant on discretionary retail spending are likely to be hit harder.
Mr Lister believes the retail sector will face a more challenging environment and in New Zealand companies such as Michael Hill and Hallenstein Glassons may be affected more than most.
He says the housing construction sector is also exposed, although the effects will be softened for the companies including Fletcher Building because there is still some housing construction in Australia that is needed to address a supply and demand issue.
Fletcher Building positive
Fletcher Building chief executive Jonathan Ling believes New Zealand companies operating in Australia will outperform their competitors because of the measures they were forced to put into place during the recession.
Fletcher Building is the largest listed company on the NZX and Mr Ling says although Australia's $42 billion stimulus package prevented the country from slipping into recession, it has also prevented companies from adapting to the different business environment that is now shaping the recovery.
He says Australian companies will need to compensate for the wind back of any government stimulus before they can move forward.
Mr Ling says because Australian companies did not have the trough in the recession that New Zealand had, they have not done nearly as much restructuring.
However, he is confident that Fletcher's businesses in Australia will outperform their competitors there.
Mr Ling says this is because its Australian businesses were restructured, which now puts them in a better position to maximise earnings as volumes improve.
