The local sharemarket rebounded in mid-afternoon trading as weakness in the New Zealand dollar came to the aid of the currency-sensitive stocks, while retirement villages remained under selling pressure because of worries about what a new Labour-led government could do to property prices.

At this afternoon's price of US70.00c, the kiwi is a full US cent lower than where it was just before NZ First leader Winston Peters announced that he would form a government Labour, which has secured a "confidence and supply" agreement with the Greens.

By 2.45 pm, the benchmark NZX-50 sharemarket index was down just four points at 8119, having fallen by 1.2 per cent to 8027 early in the session in the aftermath of Thursday night's announcement.

Currency-sensitive stocks, such as the dual-listed banks, helped fuel the bounceback, as did the export-driven Fisher and Paykel Healthcare.


F&P Healthcare, which derives most its sales in US dollars, gained 37c or 2.9 per cent to $13.20, based on weakness in the Kiwi.

Dual-listed financial institutions also shot higher on the currency effect, with ANZ rising 53c to $34.25, Westpac firming 74c to $37.49 and AMP improving by 17c to $5.70.

However the retirement sector stocks were all weaker, with Ryman falling 28c to $9.30, Metlifecare 13c to $5.90 and Summerset 13c to $4.95, based on concerns that the property market could tank under a Labour-NZ First-Greens coalition.

Retirement village companies are sensitive to movements in the real estate market and Labour, in the run up to the election, talked about the possibility of a capital gains tax on property.

Labour proposed to set up a Tax Working Group, "to ensure that there is a better and fairer balance between the taxation of income and assets, in particular the capital gain associated with property speculation". The outcomes of the Working Group - if any - would not take effect until the 2021 tax year, it said.

The party also talked about scrapping the ability of investor-landlords to negative gear their properties for tax purposes.

Uncertainty on the policy front comes at a time of cooling property prices and signs that immigration may have peaked.

Property development is a big part of how retirement village companies operate, so fluctuations in property prices can have big impact on their prospects, Matt Goodson, managing director of Salt Funds Management, said.

They vulnerable to property trends on two fronts - their units are priced off the going property values of the areas where they operate.

"Secondly, like all property developers, it is important that they do not have vacant units," he said.

Overall, after an initial spate selling, investors appeared to take the change of government in its stride.

"The market is not down in the dumps," he said.

"People are just trying to figure out what the likely polices will be," Goodson said.

"It's not like we've just elected Donald Trump."