An analysis warns them against the markets “political risk”
The rise of populism and protest among American and European political systems greatly affects investors, who are struggling to adapt to this new reality, says a new analysis of the firm Unigestion.
A few days before the US presidential election on November 8, the stock market reacted strongly, seeing the Republican candidate, Donald Trump, be closer to his Democratic rival in the polls. Since the close of markets on Monday, the Dow Jones lost 211.75 Points (-1.2%), while the Nasdaq fell 130.72 point (-2.5%). Investors have the jitters, summarized the observers.
This is the most blatant example of what two experts Unigestion call ” political risk “In their latest publication.” The growing number of voters opting for the radical opposition parties contesting the benefits of globalization, capitalism, free trade, immigration and multiculturalism represents a risk for investors “Write Jeremy Gatto and Florian Ielpo.
On both sides of the Atlantic, the political risk is the result of a ras-le-bol of the population, especially denounces economic inequality and the effects of globalization. ” Governments are now increasingly considered to have lost control of their economies, and this idea could wreak havoc in the upcoming elections “The authors note.
The resonance of the anti-system candidates has become so important, they add, ” that the traditional parties can no longer afford to ignore their claims as they have done so far “. Meanwhile,” markets show few signs that they have integrated [risk] in their courses “.
Investors have seen the impact of political risk concretely, following the vote in favor of Brexit, but it is not over: the events planned over the next 12 months on the global political scene should encourage them to keep eye open, MM note. Gatto and Ielpo.
Far-right and anti-immigration parties could indeed record significant gains in the elections scheduled in Austria, the Netherlands, France and Germany.
Regarding the US presidential election, the two analysts, however, show some optimism. ” If Trump becomes the next president of the United States, 8 November this should not, in our view, represent a political risk, as geopolitical or economic important than what is commonly believed, they argue. Although President Trump remained initially as extravagant, provocative and unrealistic Trump candidate , congressional powers would limit his powers. “