2024 could be for i financial market and the reason is a global “election bomb” ready to explode and upset the world Bags.
Markets may actually be overwhelmed by the potential political changes that come with a fraught election cycle, according to analysts at Morningstar. “Previous experience with this type of event risk shows that there can be big changes cause sales“said financial services experts.
A country accounting for more than 60% of the world’s economic output and more than half its population will go to the polls in 2024, with Taiwan start the election cycle and immediately threaten geopolitical tensions between China and the US.
But it’s not just the vote in the small island nation that Beijing still claims that worries investors. As a Reuters analysis pointed out, 9 specific choices may disrupt financial markets in 2024.
Taiwan is the first threat to the markets
Meetings will be held on January 13 political elections in Taiwan and the world, not just the financial markets, is shaking, what is at stake in the very tense relations between China and the US.
The ruling Democratic Progressive Party (DPP) competes primarily with the opposition Kuomintang (KMT) for the presidency and legislature.
A DPP victory would be the third in a row for what China calls a separatist party, which could bolster Beijing’s determination to control the island. The KMT has traditionally favored closer relations with China, but denies being pro-Beijing.
The main flash point is Taiwan tensions between the US and China. Investors fear tightening commercial rateshave already reduced their allocations to Chinese markets.
A full-scale dragon invasion of Taiwan, while considered unlikely in 2024, would pose a potentially catastrophic risk to Taiwan. global markets. Among the possible consequences of this extreme post-election development, the stoppage of advanced chip manufacturing and wiping out $1 trillion in annual global economic output, US officials said.
Europe in balance
The the European continent he is also a protagonist from an electoral point of view. During 2024, elections will actually be open for Portugal (March 10), Belgium (June 9), European Parliament (June 6-9), Croatia (autumn/winter), Romania (November), Austria (to be confirmed ).
The shock victory of Geert Wilders’ Freedom Party in the Netherlands in November has been encouragingextreme right Eurosceptic. His namesake leads opinion polls in Austria. Portugal’s Chega party’s vote could double even if the left-wing parties are in the lead.
Political analysis highlights that far-right parties are aiming to win the European Union legislature, promising to tighten migration policy and soften the reforms of the green agenda. The focus of the markets is the vote on the renewal of the European Parliament.
The Italian stocks and bondsEurope’s top performer in 2023, could suffer if any progress by Eurosceptic parties is seen as a weakening of commitmentEuropean integration. An increase in the EU’s common debt to support post-pandemic recovery has helped reduce perceived risk Italian government bonds. For this reason, it would be desirable to have a more communal and less critical and skeptical orientation to the common budget policy (which the right, on the other hand, wants to address with a nationalist rather than a pro-European tone).
Given that the European Parliament is heavily involved in legislation and the election of the bloc’s next executive, further support for Ukraine and climate policy may also be shaken.
Russia increasingly than Putin?
Vladimir Putin, to whom Boris Yeltsin entrusted the presidency on the last day of 1999, will almost certainly win the presidential election and give way to another six years in power. Polls show that the current president has more than 80% popularity in Russia.
Putin warned the West that any attempt to interfere in the election would be seen as a 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 that they hold Central Bank abroad. Russia has said it will respond if that happens.
Russian economy it was bolstered by a massive increase in defense spending during the war, even as persistent inflation fueled by a sharp weakening of the ruble forced interest rates higher.
United States, is Trump back?
That is expected Donald Trump will win the Republican primary nomination in the coming months, setting the stage for a tough fight against the incumbent Democrat Joe Biden. It will therefore hold a repeat of the 2020 election, which ended with a pro-Trump mob storming Congress in an attempt to block the confirmation of Biden’s victory.
Trump now faces criminal charges in four jurisdictions and a slew of other legal cases as he continues to falsely claim that the 2020 election was stolen. Biden calls his opponent a threat to democracy and would seek revenge on his many enemies if he regains power.
A Trump-Biden rematch could worry investors about the risk of social unrest. A tense election could affect consumer confidence as the world’s biggest economy tries to avoid it recession due to the increase in interest rates.
The dollar could swing based on election odds. The tension between the two could hurt stocks United States and China if the parties capitalize on the popularity of trade barriers, with analysts saying higher tariffs would boost inflation, push the dollar higher and hurt yuanEuro and Mexican peso.
Pledges from both sides to curb spending could derail a complex but popular deal US bonds who bets on the increase public debt. And watch out for oil: Trump is for more US drilling, which Biden has slowed.
Great Britain, will 2024 end in uncertainty?
They should take place by the end of the year UK general election.
In the polls, the opposition Labor Party, led by center-left candidate Keir Starmer, is ahead of the governing Conservatives.
The election season, a stagnant economy and a tight fiscal budget mean Treasuries could put a damper on any spending promises. The March 6 budget could include new tax cuts.
Labor plans to loosen planning rules, risking housebuilders and making targeted changes to tax rules that could hurt energy companies. He also wants closer ties with the European Union after Brexit, which could strengthen GBP.
From India to Mexico, to South Africa and Venezuela: an explosive election?
In Mexico, the presidential election will include a complete reshuffle of Congress and nine provincial elections. Polls give the incumbent National Movement of Regeneration (Morena) and its candidate, former Mexico City mayor Claudia Sheinbaum, a wide double-digit lead.
A higher cost might be enough lose weight of Mexico and damage government bonds.
It is expected in India Narendra Modi wins a third term as Prime Minister at the head of the Hindu nationalist Bharatiya Janata Party (BJP) in a national election. Investors moving cash out of China turned to India.
However, persistent inflation could hurt the BJP. Modi is expected to form a coalition if he does not get an absolute majority. India, a major exporter of raw materials, has troubled markets by curbing exports of rice, wheat and sugar. A return to fiscal populism risks an increase Fiscal deficit of Indiawhich would need financing through potentially record domestic debt.
African National Congress, in power in South Africait risks losing its parliamentary majority in an election for the first time since Nelson Mandela brought it to power in 1994.
Economic turmoil, blackouts, austerity measures and allegations of corruption have disappointed voters. The ANC may have to work with the Democratic Alliance or the Marxists for Economic Freedom.
Before the election, the government could ease austerity measures increase debt. If the ANC merges with a left party, social spending could increase. Concerns about a weak currency and government finances could slow rate cuts.
in Venezuelaincumbent Nicolás Maduro has an advantage in the presidential election, with main opposition candidate María Corina Machado barred from running for alleged crimes such as supporting US sanctions against Maduro’s government and supporting former opposition leader Juan Guaidó.
In October, the United States lifted oil sanctions for six months and debt sanctions indefinitely. But the reimposition of sanctions could rattle Venezuelan stocks and bonds. A possible debt restructuring is also in the spotlight.