TEST: Markets are set for their first big election tests of 2024 in the coming days. The incumbent DPP is in pole position in semiconductor superpower Taiwan, that would maintain the status quo of cross-strait tensions. Whilst in the US, the Iowa presidential primary unofficially kicks off the race to November 5th with Trump the front-runner. It seems like a US 2020 rerun, but it’s not. The candidates are better known, macro constraints greater, and market implications bigger. It’s one of the busiest election years ever, with 40 races from UK to India. And investors already saw market-moving election surprises at the end of last year, from Poland to Argentina.
TAIWAN: The incumbent and pro-US Democratic Progressive Party (DPP) is in pole position to win Sunday’s election, with the current vice president as candidate, after efforts to unite the opposition collapsed late last year. This result won’t please China but is the status quo and would give the DPP a historic third win. The opposition KMT still has an outside chance of sneaking a surprise victory. That could improve cross strait relations. The nation of 24 million is a semiconductor superpower, led by world’s largest foundry TSMC (TSM), upon which much of global tech is dependent. The Taiwan country ETF (EWT) is the one-stop investment shop.
USA: Monday’s Iowa presidential primaries unofficially start the race to the Nov. 5th presidential election. Trump is the clear Iowa front-runner, with Haley and DeSantis way behind, and is the overwhelming favourite to be the Republican candidate. The general election and congressional race is much tighter, with Republicans holding an early but narrow lead (see chart). Stock markets are typically supported by incumbent party efforts to gain re-election. But this is not a rerun of 2016 or 2020. The candidates are better known than ever. The constraints are greater, with debt and deficits higher and taxes lower. And global stock markets are more US-centric.
All data, figures & charts are valid as of 11/01/2024.