This year's elections will take place in countries that account for more than 60% of global economic production and more than half of the population.
Markets fear a "ballot box bombshell," according to financial services firm Morningstar, adding that "previous experience with this type of event risk shows that big changes can cause sell-offs."
Here's a list of the elections that will be important to markets in the following year, organised roughly chronologically.
Taiwan (Date: Jan 13)
Back story:
Taiwan's ruling Democratic Progressive Party (DPP) is primarily battling with the opposition Kuomintang (KMT) for the president and legislature.
A DPP victory would be the third in a row for a party China considers separatist, perhaps reinforcing Beijing's ambition to dominate Taiwan. The KMT has historically supported greater connections with China, but denies being pro-Beijing.
Market Risks:
Taiwan is the primary flashpoint in US-China hostilities. Fearing higher trade duties, investors have reduced China allocations.
A full-fledged Chinese invasion of Taiwan, while improbable in 2024, would pose a potentially catastrophic risk to world markets, including the suspension of advanced chip manufacturing and the loss of $1 trillion in yearly global economic activity, according to US authorities.
An unofficial maritime line of control separates China and Taiwan. China does not acknowledge the boundary, yet neither side's aircraft nor battleships typically cross it.
An unofficial maritime line of control separates China and Taiwan. China does not acknowledge the boundary, yet neither side's aircraft nor battleships typically cross it.
Europe (Dates: March 10 (Portugal), June 9 (Belgium), June 6-9 (European Parliament), autumn/winter (Croatia), November (Romania), to be confirmed (Austria))
Back story:
The surprise victory of Geert Wilders' Freedom Party in the Netherlands in November energised the Eurosceptic far-right. Its namesake currently leads Austria's polls. Portugal's Chega party's vote share could quadruple, but left-wing parties still lead.
Crucially, far-right groups are eyeing victories in the European Union's legislature, promising to toughen migration policy and reduce environmental rules.
Market Risks:
Italian stocks and bonds, Europe's best performers in 2023, may suffer if gains for eurosceptic parties are interpreted as a lessening of commitment to European integration.
The EU's increased shared debt to support the post-pandemic recovery has helped to lessen the perceived risk of Italian debt.
With the EU parliament highly involved in legislation and the election of the bloc's next executive, keep an eye out for updates on additional funding for Ukraine and climate policy.
Russia (Date: March 17)
Back story:
Vladimir Putin, who took over the presidency from Boris Yeltsin on December 31, 1999, is almost set to win another six years in power. Polls suggest that Putin has approval ratings of more than 80% in Russia. Opposition politicians claim that the election is a well staged facsimile of democracy.
Key market risk:
Putin's campaign may expose more about his thoughts on the Ukraine conflict. Putin has warned the West that any attempt to interfere with the election will be regarded an act of hostility.
Western governments, including the United States and Japan, are considering seizing frozen Russian assets, such as cash and government bonds held by the country's central bank overseas. Russia has stated that it will retaliate if this happens.
Russia's economy has benefited from enormous increases in defence spending for the conflict, but chronic inflation, fueled by a steep rouble devaluation, has forced interest rates higher.
India (Date: April-May, yet to be announced)
Back Story:
Narendra Modi is anticipated to win a third term as prime minister of the Hindu nationalist Bharatiya Janata Party (BJP) in the upcoming national elections. Investors looking to move money out of China have turned to India.
Key market risks:
Persistent inflation could harm the BJP. If Modi fails to secure an outright majority, he will be forced to create a coalition government.
India, a key commodity exporter, has roiled markets by banning rice, wheat, and sugar exports. A return to fiscal populism risks increasing India's budget imbalance, which would require finance from potentially record domestic market borrowing.
Mexico (Date: June 2)
Back story:
The presidential election will result in a complete reshuffle of Congress as well as nine state elections. Polls show the incumbent National Regeneration Movement (Morena) party and its candidate, ex-Mexico City mayor Claudia Sheinbaum, with a sizable double-digit lead.
It is expected that a more balanced Congress will prevent populist Morena from changing the Constitution. However, given the effectiveness of current President Andrés Manuel Lopez Obrador's spending initiatives, Sheinbaum is expected to follow suit.
Key market risk:
Increased spending may weaken the Mexican peso and harm government bonds.
South Africa (Date: May-August 2024 (yet to be announced)
Back story:
The ruling African National Congress faces losing its legislative majority in elections for the first time since Nelson Mandela took power in 1994.
Economic instability, power outages, austerity measures, and corruption charges have alienated voters. The ANC may need to work with the Democratic Alliance or Marxist Economic Freedom.
Key market risks:
Before the election, the government could relax austerity measures, increasing debt. If the ANC forms an alliance with a socialist party, social spending could increase. Concerns about a weak currency and public finances may hinder rate decreases.
United States (Date: Nov 5)
Back story:
Donald Trump is expected to win the Republican nomination in upcoming primaries, setting up a tight race with Democrat incumbent Joe Biden - a rerun of the 2020 election, which ended with a pro-Trump mob storming Congress in an attempt to prevent Biden's victory from being certified.
Trump is now facing criminal proceedings in four jurisdictions, as well as a number of other legal cases, while continuing to falsely assert that the 2020 election was stolen. Biden describes his opponent as a menace to democracy who would seek retribution on his numerous foes if he regained power.
Market risks:
Markets ignored the violence that preceded the election four years ago. However, given the harsh rhetoric on both sides this time, a Trump-Biden rematch may continue to concern investors about the danger of societal instability.
A nasty election might have an impact on consumer morale as the world's largest economy strives to avoid a recession caused by the long-term impacts of aggressive interest rate increases.
The dollar's value could fluctuate depending on election outcomes.
Stocks may suffer as a result of anxiety over US-China tensions if the parties capitalise on the popularity of trade barriers, with analysts claiming that greater tariffs would fuel inflation, strengthen the dollar, and harm the yuan, euro, and Mexican peso.
Spending cuts pledged by either party could upend a complex but popular US bond trade in which investors bet that government borrowing would rise. And keep an eye on oil: Trump wants increased drilling in the United States, while Biden has limited it.
Britain (Date: due by Jan 2025, expected by end-2024)
Back Story:
The opposition Labour Party, led by centre-left candidate Keir Starmer, leads the ruling Conservatives in the polls.
Market Risks:
Pre-election, a slow economy, and a tight fiscal budget mean that any unexpected spending commitments may cause government bonds to fall. A budget for March 6 may include fresh tax cuts.
Labour intends to relax planning restrictions, putting housebuilders at risk, as well as make targeted adjustments to tax rules, potentially harming energy industries. It also wants closer ties with the EU after Brexit, which might support sterling.
Venezuela (Date: 2024 ; yet to be announced)
Back Story:
Nicolás Maduro has an edge in presidential elections, as leading opposition candidate María Corina Machado is barred from running owing to suspected crimes such as supporting US sanctions on Maduro's regime and endorsing former opposition leader Juan Guaido.
Key Market Risks:
In October, the United States removed oil sanctions for six months and debt restrictions indefinitely, allowing US investors to trade some bonds in exchange for discussions to assure fair and free elections.
Sanctions that are reinstated may cause stock and bond market volatility in Venezuela. Following the lifting of sanctions, bond prices more than doubled. A prospective debt restructure is also under consideration.
(Source:www.reuters.com)
Markets fear a "ballot box bombshell," according to financial services firm Morningstar, adding that "previous experience with this type of event risk shows that big changes can cause sell-offs."
Here's a list of the elections that will be important to markets in the following year, organised roughly chronologically.
Taiwan (Date: Jan 13)
Back story:
Taiwan's ruling Democratic Progressive Party (DPP) is primarily battling with the opposition Kuomintang (KMT) for the president and legislature.
A DPP victory would be the third in a row for a party China considers separatist, perhaps reinforcing Beijing's ambition to dominate Taiwan. The KMT has historically supported greater connections with China, but denies being pro-Beijing.
Market Risks:
Taiwan is the primary flashpoint in US-China hostilities. Fearing higher trade duties, investors have reduced China allocations.
A full-fledged Chinese invasion of Taiwan, while improbable in 2024, would pose a potentially catastrophic risk to world markets, including the suspension of advanced chip manufacturing and the loss of $1 trillion in yearly global economic activity, according to US authorities.
An unofficial maritime line of control separates China and Taiwan. China does not acknowledge the boundary, yet neither side's aircraft nor battleships typically cross it.
An unofficial maritime line of control separates China and Taiwan. China does not acknowledge the boundary, yet neither side's aircraft nor battleships typically cross it.
Europe (Dates: March 10 (Portugal), June 9 (Belgium), June 6-9 (European Parliament), autumn/winter (Croatia), November (Romania), to be confirmed (Austria))
Back story:
The surprise victory of Geert Wilders' Freedom Party in the Netherlands in November energised the Eurosceptic far-right. Its namesake currently leads Austria's polls. Portugal's Chega party's vote share could quadruple, but left-wing parties still lead.
Crucially, far-right groups are eyeing victories in the European Union's legislature, promising to toughen migration policy and reduce environmental rules.
Market Risks:
Italian stocks and bonds, Europe's best performers in 2023, may suffer if gains for eurosceptic parties are interpreted as a lessening of commitment to European integration.
The EU's increased shared debt to support the post-pandemic recovery has helped to lessen the perceived risk of Italian debt.
With the EU parliament highly involved in legislation and the election of the bloc's next executive, keep an eye out for updates on additional funding for Ukraine and climate policy.
Russia (Date: March 17)
Back story:
Vladimir Putin, who took over the presidency from Boris Yeltsin on December 31, 1999, is almost set to win another six years in power. Polls suggest that Putin has approval ratings of more than 80% in Russia. Opposition politicians claim that the election is a well staged facsimile of democracy.
Key market risk:
Putin's campaign may expose more about his thoughts on the Ukraine conflict. Putin has warned the West that any attempt to interfere with the election will be regarded an act of hostility.
Western governments, including the United States and Japan, are considering seizing frozen Russian assets, such as cash and government bonds held by the country's central bank overseas. Russia has stated that it will retaliate if this happens.
Russia's economy has benefited from enormous increases in defence spending for the conflict, but chronic inflation, fueled by a steep rouble devaluation, has forced interest rates higher.
India (Date: April-May, yet to be announced)
Back Story:
Narendra Modi is anticipated to win a third term as prime minister of the Hindu nationalist Bharatiya Janata Party (BJP) in the upcoming national elections. Investors looking to move money out of China have turned to India.
Key market risks:
Persistent inflation could harm the BJP. If Modi fails to secure an outright majority, he will be forced to create a coalition government.
India, a key commodity exporter, has roiled markets by banning rice, wheat, and sugar exports. A return to fiscal populism risks increasing India's budget imbalance, which would require finance from potentially record domestic market borrowing.
Mexico (Date: June 2)
Back story:
The presidential election will result in a complete reshuffle of Congress as well as nine state elections. Polls show the incumbent National Regeneration Movement (Morena) party and its candidate, ex-Mexico City mayor Claudia Sheinbaum, with a sizable double-digit lead.
It is expected that a more balanced Congress will prevent populist Morena from changing the Constitution. However, given the effectiveness of current President Andrés Manuel Lopez Obrador's spending initiatives, Sheinbaum is expected to follow suit.
Key market risk:
Increased spending may weaken the Mexican peso and harm government bonds.
South Africa (Date: May-August 2024 (yet to be announced)
Back story:
The ruling African National Congress faces losing its legislative majority in elections for the first time since Nelson Mandela took power in 1994.
Economic instability, power outages, austerity measures, and corruption charges have alienated voters. The ANC may need to work with the Democratic Alliance or Marxist Economic Freedom.
Key market risks:
Before the election, the government could relax austerity measures, increasing debt. If the ANC forms an alliance with a socialist party, social spending could increase. Concerns about a weak currency and public finances may hinder rate decreases.
United States (Date: Nov 5)
Back story:
Donald Trump is expected to win the Republican nomination in upcoming primaries, setting up a tight race with Democrat incumbent Joe Biden - a rerun of the 2020 election, which ended with a pro-Trump mob storming Congress in an attempt to prevent Biden's victory from being certified.
Trump is now facing criminal proceedings in four jurisdictions, as well as a number of other legal cases, while continuing to falsely assert that the 2020 election was stolen. Biden describes his opponent as a menace to democracy who would seek retribution on his numerous foes if he regained power.
Market risks:
Markets ignored the violence that preceded the election four years ago. However, given the harsh rhetoric on both sides this time, a Trump-Biden rematch may continue to concern investors about the danger of societal instability.
A nasty election might have an impact on consumer morale as the world's largest economy strives to avoid a recession caused by the long-term impacts of aggressive interest rate increases.
The dollar's value could fluctuate depending on election outcomes.
Stocks may suffer as a result of anxiety over US-China tensions if the parties capitalise on the popularity of trade barriers, with analysts claiming that greater tariffs would fuel inflation, strengthen the dollar, and harm the yuan, euro, and Mexican peso.
Spending cuts pledged by either party could upend a complex but popular US bond trade in which investors bet that government borrowing would rise. And keep an eye on oil: Trump wants increased drilling in the United States, while Biden has limited it.
Britain (Date: due by Jan 2025, expected by end-2024)
Back Story:
The opposition Labour Party, led by centre-left candidate Keir Starmer, leads the ruling Conservatives in the polls.
Market Risks:
Pre-election, a slow economy, and a tight fiscal budget mean that any unexpected spending commitments may cause government bonds to fall. A budget for March 6 may include fresh tax cuts.
Labour intends to relax planning restrictions, putting housebuilders at risk, as well as make targeted adjustments to tax rules, potentially harming energy industries. It also wants closer ties with the EU after Brexit, which might support sterling.
Venezuela (Date: 2024 ; yet to be announced)
Back Story:
Nicolás Maduro has an edge in presidential elections, as leading opposition candidate María Corina Machado is barred from running owing to suspected crimes such as supporting US sanctions on Maduro's regime and endorsing former opposition leader Juan Guaido.
Key Market Risks:
In October, the United States removed oil sanctions for six months and debt restrictions indefinitely, allowing US investors to trade some bonds in exchange for discussions to assure fair and free elections.
Sanctions that are reinstated may cause stock and bond market volatility in Venezuela. Following the lifting of sanctions, bond prices more than doubled. A prospective debt restructure is also under consideration.
(Source:www.reuters.com)
