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Countries that account for more than 60% of the world’s economic output and more than half of the world’s population will hold elections this year.
Financial services organization Morningstar said the market was facing a “ballot box bomb” and added: “Previous experience with this type of event risk suggests that major changes can trigger a sell-off. “I have,” he added.
Here’s a roughly chronological look at the elections that will be important to the market next year.
Date: January 13th
Backstory:
Taiwan’s ruling party, the Democratic Progressive Party (DP), is mainly competing with the opposition Kuomintang (KMT) for the presidential and legislative positions.
A victory for the Democratic Progressive Party would be the party’s third consecutive victory, which China calls separatist, and could strengthen Beijing’s determination to control Taiwan. The Kuomintang has traditionally supported close ties with China, but denies being pro-China.
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Market risk:
Taiwan has become a major flashpoint for U.S.-China tensions. Investors are worried about escalating trade tariffs and are cutting allocations to China.
Although a full-scale Chinese invasion of Taiwan is seen as unlikely in 2024, it would be potentially devastating for global markets, including halting advanced chip manufacturing and erasing $1 trillion in global annual economic output. U.S. officials said this could pose significant risks.
2/ Europe
Dates: March 10 (Portugal), June 9 (Belgium), June 6-9 (European Parliament), Autumn/Winter (Croatia), November (Romania), TBA (Austria)
Backstory:
The shock victory of Geert Wilders’ Liberal Party in the Netherlands in November excited the Eurosceptic far-right. Its namesake leads Austria in public opinion polls. Portugal’s Chega party could double its votes, but left-wing parties are in the lead.
Importantly, far-right parties are eyeing a breakthrough in the European Union parliament, claiming they will toughen immigration policies and ease green reforms.
Market risk:
Italian stocks and bonds, Europe’s top performing stocks in 2023, could suffer if Eurosceptic interests are seen as weakening commitment to European integration.
The EU’s increase in collective debt to support the post-pandemic recovery has helped reduce the perceived risk of Italy’s debt.
The EU Parliament is heavily involved in legislation and the selection of the EU’s next chief executive, so keep an eye out for announcements on further support for Ukraine and climate change policy.
3/ Russia:
Date: March 17th
Backstory:
Vladimir Putin, who was handed over the presidency by Boris Yeltsin at the end of 1999, is certain to remain in power for another six years. According to opinion polls, President Putin’s approval rating in Russia is over 80%. Opposition politicians say the election is a carefully staged imitation of democracy.
Key market risks:
During the election campaign, President Putin may reveal more about his thoughts on the Ukraine war. President Putin warned the West that any attempt to interfere in the election would be considered an act of aggression.
Western governments such as the United States and Japan are considering seizing frozen Russian assets such as cash and government bonds held by foreign central banks. Russia has said it would retaliate if such a thing happened.
Russia’s economy has been boosted by a huge increase in defense spending due to the war, but stubborn inflation, fueled by a sharp depreciation of the ruble, has driven up interest rates.
4/ India
Date: April to May, to be determined
Backstory:
Narendra Modi is expected to win a third term as prime minister and leader of the Hindu nationalist Bharatiya Janata Party (BJP) in the national election. Investors who are flushing cash out of China are turning to India.
Key market risks:
Sustained inflation could be a blow to the Bharatiya Janata Party. If Prime Minister Modi cannot win a majority, he will need to form a coalition.
India, a major commodity exporter, has disrupted markets by restricting exports of rice, wheat and sugar. A return to fiscal populism risks pushing up India’s budget deficit, requiring it to be financed through potentially record amounts of domestic market borrowing.
5/ Mexico
Date: June 2nd
Backstory:
The presidential election includes a complete reorganization of Congress and nine state elections. Opinion polls show the incumbent Morena Party and its candidate, former Mexican mayor Claudia Sheinbaum, leading by a wide double-digit margin.
Expectations are high for a more balanced parliament that will block constitutional reforms by populist Morena. But given the success of current President Andres Manuel López Obrador’s spending drive, Mr. Sheinbaum is expected to follow suit.
Key market risks:
Higher spending could weaken the Mexican peso and hurt the national debt.
6/ South Africa
Date: May to August 2024 (to be determined)
Backstory:
The ruling African National Congress is at risk of losing its parliamentary majority in an election for the first time since Nelson Mandela came to power in 1994.
Economic turmoil, power outages, fiscal austerity and corruption allegations are driving voters away. The ANC may need to ally with the Democratic Alliance or Marxist Economic Freedom.
Key market risks:
There is a possibility that the government will ease austerity measures before the election, leading to an increase in debt. If the ANC joins forces with left-wing parties, social spending could increase. Currency depreciation and fiscal concerns could delay a rate cut.
7/ United States
Date: November 5th
Backstory:
Donald Trump is expected to win the Republican nomination in a primary election in the coming months, setting the stage for a close race against Democratic incumbent Joe Biden – and a pro-Trump mob storms Congress to try to stop him. This will be a re-run of the 2020 election, which ended with an intrusion into the country. Certification of Biden’s victory.
President Trump currently faces criminal trials and a series of other lawsuits in four jurisdictions, but continues to falsely claim the 2020 election was stolen. Biden has called his opponents a threat to democracy, saying he will seek revenge on his many enemies if he regains power.
Market risk:
Markets ignored the post-election violence four years ago. But given the heated rhetoric on both sides, a rematch between Trump and Biden could still make investors nervous about the risk of civil unrest.
A difficult election could weigh on consumer sentiment as the world’s largest economy seeks to avoid a recession by delaying aggressive interest rate hikes.
The dollar may fluctuate depending on the probability of elections.
Analysts say higher tariffs would accelerate inflation, push up the dollar and hurt the yuan, euro and Mexican peso, raising alarm over U.S.-China tensions if the two countries capitalize on the popularity of trade barriers. There is a possibility that stock prices will fall due to this feeling.
Pledging spending cuts by either party could upend the complex but popular U.S. Treasury trade that bets on increased government borrowing. Also, pay attention to oil. Mr. Trump supports expanding U.S. drilling, but Mr. Biden is curbing it.
8/UK
Dates: due by January 2025, expected by end of 2024
Backstory:
The opposition Labor Party, led by centre-left candidate Keir Starmer, is leading the ruling Conservative Party in opinion polls.
Market risk:
In the run-up to the election, a sluggish economy, and tight fiscal conditions, unexpected spending pledges could destabilize the national debt. New tax cuts may be included in the March 6 budget.
Labor will make targeted changes to the tax system that could put house builders at risk, ease planning rules and hurt energy companies. The UK also wants closer ties with the European Union after Brexit, which could lead to a stronger pound.
9/ Venezuela
Date: 2024 TBA
Backstory:
Incumbent Nicolás Maduro has the advantage in the presidential election, and the main opposition candidate, Maria Colina Machado, has been accused of crimes such as supporting US sanctions against the Maduro government and supporting former opposition leader Juan Guaido. are prohibited from participating in elections.
Key market risks:
In October, the US lifted oil sanctions for six months, lifted debt sanctions indefinitely and allowed US investors to trade some bonds in exchange for talks to ensure fair and free elections. I made it.
If sanctions are reinstated, Venezuelan stocks and bonds could be shaken. Stock prices were very low, and bond prices more than doubled after sanctions were lifted. Potential debt restructuring is also in focus.
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