Although Canada does not have national elections currently scheduled in 2024, more than 50 countries around the world will hold elections or have already held elections this year, according to The Center for American Progress.¹ In most cases, the results of these elections have broader implications for domestic policies in those countries and will affect Canadian investors with international holdings, although their impact might not be obvious right away.

The map below highlights territories that are holding elections this year and are well-represented in Fiduciary Trust Canada portfolios.

 

Markets to Watch: Key Elections in 2024

This map shows territories with national elections in 2024 with the most significant representation in Fiduciary Trust portfolios. They are ranked from most important in dark blue to less important in the lighter shade of green.

Source: Analysis by Franklin Templeton Institute

 

United States

As the world’s largest economy, the importance of the United States presidential elections in November cannot be overstated. The two-party system produces binary outcomes, but experience shows that the key to any president’s ability to execute on an agenda is support from the same party in the House and Senate.

Implications for investors: Judging by information currently available, investors can expect policies to boost American manufacturing, reshoring of the U.S.-Mexico-Canada Agreement (USMCA), continued obstacles to trade with China, and a reluctance to commit to direct intervention in foreign wars. Depending on election results, the sitting party could further distance the U.S. from NATO and Ukraine, which would encourage the United Kingdom to align more closely with other NATO members and the EU. Tensions between the U.S. and China could escalate, leading other Asian countries to question the U.S.’s commitment to their regions and encourage them to strengthen their ties to China. These actions could potentially result in trade restrictions, tariffs and supply chain issues, leading to higher prices for consumer goods.

European Union

In June, approximately 450 million citizens of the 27 member states of the EU will hold elections for the European Parliament. Historically, it has been dominated by center parties—the European Peoples’ Party (EPP) and the Socialists and Democrats (S&D). This time, the polls suggest a more “right-wing” leaning EU. The moderate European Conservatives and Reformists (ECR) are strongly anti-Russia, take a hard line on immigration, and reject proposals for a more unified and cohesive “federal” European state. But they do work with centre parties. The newer and rising Identity and Democracy (I&D) grouping is more sympathetic to Russia, skeptical on Brussels, and less likely to be constructive in policymaking.

Implications for investors: The momentum behind Europe’s green transition, border issues, and defense policies will be heavily influenced by the political party that controls the European Parliament after the elections.

United Kingdom

Although the UK government has until January 2025 to hold elections, most observers expect elections in November or December 2024. The polls suggest a shift away from the Conservative Party’s dominance, which it has held for the past 14 years. A Labour government would likely lead to more productive relations with the EU, although there is no suggestion of a move to reverse Brexit.

Implications for investors: The challenge for investors is gauging the UK’s attractiveness. While market valuations are relatively low when compared to historical levels, the UK faces productivity issues, stretched government finances, and a tough economic outlook.

India

India will hold the largest election in terms of number of voters and duration, starting in April and lasting several months. Around 945 million registered voters in India will have the opportunity to elect their representatives in the Lok Sabha. The latest polls suggest that Prime Minister Narendra Modi’s personal popularity will sweep him back into power, although his party’s majority in parliament may shrink. The opposition has formed a 26-party coalition under the acronym INDIA, but it lacks a unifying leader to rival Modi. This third term of a Bharatiya Janata Party (BJP)-led government is expected to continue pushing the “Make in India” agenda, while framing investments in infrastructure as a necessity.

Implications for investors: India will likely continue to block Chinese investment in electric vehicles, preferring to subsidize domestic production. The 2024 budget will likely also show increasing tax revenues, and investors anticipate a post-election reduction in interest rates. There may be some progress with the implementation of new labor laws, which could attract foreign direct investment. International investors have high expectations; execution on policies after the election is key.

Given India’s rising prominence in global trade markets, the elections could have a major impact on the ability of Indian companies to further expand their international reach.

Taiwan

Recent elections resulted in a Democratic Progressive Party (DPP) president, but a legislature dominated by the opposition Kuomintang (KMT) and Taiwan People’s Party (TPP) parties. President William Lai will have to negotiate with the opposition parties to execute on his campaign platform, including a push to phase out nuclear power in favor of solar and wind power, and lengthen military service requirements.

Implications for investors: Valuations for wind-power-related companies have already been driven up on the Taiwan Stock Exchange. We expect Taiwan to continue campaigning for access to more export markets.

This Year is Different

For context, please keep in mind that geopolitical developments are just one of the many economic and market factors we examine when assembling and managing portfolios. In addition to the research we receive from our analysts across the globe, we tailor asset allocation decisions and portfolio holdings to address individual goals, risk tolerance, time horizon, liquidity needs, tax treatment, legal designations and more. These decisions are monitored, revisited, and can be adjusted when the environment or personal circumstances change.

In general, history shows that elections have a modest effect on the economy and financial markets, especially when the same party fails to gain control of the leadership and legislatures. But there are several issues in play this year that could have far-reaching implications.

Policies that favor globalism would likely strengthen international trade and the companies that rely on it for supplies and distribution, while a stronger embrace of protectionism could weigh on those stock prices. In many developed economies, political parties have opposing views about engaging in military conflicts overseas, fighting inflation, transitioning away from fossil fuels, and a host of other issues.

The only guarantee is that this year’s elections will bring the one thing financial markets dislike the most—uncertainty.

 

 

 

1. https://www.americanprogress.org/article/protecting-democracy-online-in-2024-and-beyond/