Milford Asset Management senior analyst Frances Sweetman said the government efforts to crack down on money coming into this country were having limited effect so far because they were targeted specifically at residential housing and rural land.

Even with those controls, New Zealand would remain a “very, very open economy”, with an open government and investment regime, she said. The government seemed to be simply trying to more tightly target foreign direct investment to the areas of the economy were it would be of most benefit.

New Zealand was relatively reliant on offshore investment, but that was part of being an exporting nation, she said.

“The most important thing is because we are a very small and open economy that’s absolutely reliant on exporting goods and services you can’t be an open economy and fully restrict foreign investment.”

New Zealand’s investment market has one of the highest proportions of international ownership in the world. Sweetman said the latest official estimates were that offshore companies operating in New Zealand were worth $100 billion.

If that were to be removed, New Zealand would struggle to come up with enough local capital to plug the gap.

There is about $150b in term deposits but Sweetman said it could not be assumed that money would transfer across to riskier equity investments. “Of course it doesn’t work like that.”

New Zealanders were also investing offshore, she said.

The discussion was not yet part of investment decisions.

“It would have the ability to move interest rates or the New Zealand dollar but at the moment it’s not, so in that sense it’s not influencing our investment decisions,” she said.

“But it is important for New Zealand companies – those that invest offshore themselves or those that have foreign investment into them. Take Fonterra with its Beingmate investment, which has been relatively unsuccessful, with numerous profit write-downs that may affect the balance sheet.

“Or, on the other side, both Scales and Comvita have had China Resources take a stake and put members on the board, which is massively beneficial for them, or potentially so, in terms of accessing new distribution channels and bringing knowledge about the Chinese market. Considerations like those do have an influence on our investment decisions.”