ELECTIONS: 2024 is a huge political year with 20% of all countries globally, equal to 40% of the world economy likely going to the polls (see table). The year is bookended by arguably the two most important elections. Taiwan in January and the USA in November. With everyone from Russia to India and the EU in between. Investors have grudgingly adjusted to a ‘new normal’ of high geopolitical and economic policy uncertainty. But the 2023 election surprises from Poland to Argentina are a reminder of their capacity to move markets and change the direction of policy. Elections are one of the big three 2024 drivers alongside recession risks and interest rate cuts.
TAIWAN: The semiconductor superpower of 23 million goes to the polls January 13th to elect a president for the next four years. Delicate cross-strait relations with China dominate the issues, followed by the slowly recovering export economy, the future of its nuclear industry, and degree of military conscription. The presidential race has been turned on its head by a potential alliance between the second and third polling KMT and TPP opposition parties. This could set them up for an unlikely victory. And would undermine the incumbent DPP party candidate who is leading the polls. DPP has ruled Taiwan since 2016, after which China cut off routine cross-strait talks.
USA: Markets are braced for a rerun of the Biden vs Trump 2020 race, and early polls are near deadlocked. But any uncertainty is balanced by the well-known governing records of both. The Congressional race is as important given the divided and narrowly gridlocked legislature. With Democrats holding a 2 seat Senate majority and Republicans a 10 seat House one. The US dominates global capital markets, including 60% of stock market cap, so the investing world is watching. Presidential cycle theory (that’s a thing) shows the highest stock returns in the penultimate third and fourth presidential years, driven by the incumbent efforts to get re-elected.
All data, figures & charts are valid as of 13/11/2023.