The election of controversial Australian anti-migrant firebrand Pauline Hanson has raised concerns that her political comeback could affect Asian investment and damage the nation's reputation abroad.

The warnings came as continued counting in Australia's knife-edge election suggested Australia's Prime Minister, Mr Malcolm Turnbull, will be in a strong position to form a minority government and could yet achieve a tiny majority.

Mr Turnbull's conservative Liberal-National Coalition was on track to win 72 seats in the 150-member Lower House. The Labor opposition was expected to win 66 seats, with five independents and seven seats still uncertain.

Analysts believe the Coalition is likely to end up with 75 seats, which would require it to rely on the support of at least one independent MP. But Mr Turnbull could yet gain a tiny majority if counting of some one million postal and absentee votes falls his way.

"At this stage, the Coalition can still win a majority but they need to see a narrowing trend in those seats where Labor is ahead," said Mr Antony Green, ABC's election analyst.

Mr Turnbull has faced open criticism from some MPs, particularly from the Liberal party's conservative wing, which has long viewed him with suspicion.

An outspoken Liberal MP, Mr Corey Bernardi, labelled the election campaign a "disaster" and revealed that he was forming a breakaway movement called the Australian Conservatives.

In a blog, he said that the movement would seek "to help change politics and to give common sense a united voice".

Yesterday, prominent political and business leaders warned about the impact of the election of Ms Hanson, the leader of the Queensland- based far-right One Nation party.

During her stint as an MP in the late 1990s, Ms Hanson famously warned that Australia risked being "swamped by Asians". She has since focused her attacks on Muslims, but has not renounced her claims that Australia needs to limit Asian migration.

"You go and ask a lot of people in Sydney, at Hurstville or some of the other suburbs (which have large populations from China and other Asian countries)," she said this week.

"They feel they have been swamped by Asians and, regardless of that now, a lot of Australians feel that Asians are buying up prime agricultural land, housing."

Although the Coalition and Labor have strongly denounced Ms Hanson and made it clear they would not cooperate with her, her presence has raised concerns about Australia's standing in the region.

Former Australian foreign minister Bob Carr said yesterday that Ms Hanson would harm the nation's image, labelling her "an embarrassment to Australia in Asia".

"Her name is unlikely to figure in diplomatic conversations, but that's only because our friends in governments in countries like Malaysia and Indonesia will be too polite to mention it," he told Fairfax Media.

"All countries have mischievous troublemakers and racists like Pauline Hanson in their political systems, forever whipping up racist anguish in times of economic adjustment. It would have been nice though if Australia was one country left unblemished by this racist populism."

The Sydney-based Australia China Entrepreneurs Club, which includes wealthy Chinese investors, said the return of Ms Hanson had already prompted phone calls asking "Should we still invest in Australia?"

"It's very bad for foreign investment," the club's chairman, Mr Richard Yuan, told The Australian Financial Review.

"Her political ideology is anti- Asian, anti-multiculturalism to cause a stirring against any coloured people… She advocates the White Australian policy. Everybody talked about it when they were thinking about migration and without migration and integration, it's bad for business, and housing."

With counting in the Senate to take weeks, the One Nation party is on track to win at least one seat and as many as four in the chamber.

Ms Hanson's policies at this election include calls for a royal commission into Islam and the installation of security cameras in mosques. She has tended to attract the support of people who feel disaffected and disenfranchised, though not all base their votes on her views on Asians and Muslims.