iPredict on Labour Leader and PM

Analysing the prices of the stocks for the next Labour Leader, and for being PM before 2015 shows us some fascinating insights into how the market views the electability of the various candidates.

The market says there is currently a 55% chance of Labour winning the 2014 election. So in theory the odds of a Labour contender becoming PM by 2015 should be the probability of them winning the Labour Leadership x 55%. But let us look at the actual prices.

David Shearer is at 34.0% for the leadership. This means his PM price should be 18.7%. However it is at 23.2% which indicates the market thinks Labour has a better chance of beating National in 2014 if he is Leader.

David Cunliffe is at 38.5% for the leadership. This means his PM price should be 21.2%. However it is at 14.0% which indicates the market thinks Labour has a worse chance of beating National in 2014 if he is Leader.

David Parker is at 31.0% for the leadership. This means his PM price should be 17.1%. However it is at 7.8% which indicates the market thinks Labour has a much worse chance of beating National in 2014 if he is Leader.

Grant Robertson is at 1.7% for the leadership. This means his PM price should be 0.9%. However it is at 9.4% which was initially a mystery to me. The only way to reconcile his far far higher price for being PM by 2015 than being the next Labour Party Leader, is that the market thinks there is a significant chance that Robertson will roll whomever is elected Leader before the next election, and that Robertson will then become Prime Minister after the 2014 election.

So the market thinks Labour is most likely to win if David Shearer is elected Leader, and if Cunliffe or Parker is elected Leader, they are more likely to lose or be rolled by Robertson before the 2014 election – which Labour is favoured to then win.