The Tribune

By CHRIS ILLING

CCO @ ActivTrades Corp

Investors worldwide are nervously looking forward to the numerous trend-setting elections this year. This year is set to be a record-breaking one for elections, with more than two billion voters going to the polls in 50 countries. We have entered a new age of political extremes, culture and trade wars, cold and actually shooting wars.

The first major event was the European elections a few weeks ago, in which right-wing and populist forces made strong gains. As a result, the stock markets came under pressure throughout Europe. This was also because French president, Emmanuel Macron, had announced new elections on the same day. They have run in the meantime, and did not produce a clear winner in the second and last round of voting. However, a shift to the right was observed in France, especially in the first round of voting, and in the second, extreme left-wing forces were also among the winners.

In the UK, Sir Keir Starmer was confirmed as Britain’s new prime minister after the Labour Party’s decisive win that ended 14 years of Conservative rule. Next up is the US, which will vote for a president in November, and the election campaign is already turbulent (this article was written before the attempted assassination of former president, Donald Trump).

The questions now are how investors should deal with the unsettled situation at the political level. Will this affect the financial markets and the stock markets in the long-term? Where are the investment opportunities on the stock and bond market right now?

Basically, the time before the election is always much more dangerous for the markets than the time after the election. This is because the markets find it very difficult to live with uncertainty. When the uncertainty is gone, you can plan better. But, historically, investors can expect higher volatility and lower returns.

Yet after the election is over, and the markets are non-partisan, business often continues as normal. Fundamental factors such as monetary policy, fiscal policy, economic growth, labour markets and corporate profits become the focus for investors once again.

The savvy investor will keep a close eye on the election race between Mr Biden and Mr Trump, and who could influence markets after the results are in.