Election Impact on Stock Markets: Developed Markets See Short Volatility, Emerging Markets Prefer Change Candidates
• Historically elections don't have a major impact on developed market equities - they see some volatility around election day but generally maintain an upward trend
• In the U.S., markets tend to rise going into elections and keep rising afterwards. Cyclical sectors do particularly well post-election.
• Markets prefer continuity but adjust to "change" elections after a 4-5 month lag. Markets prefer right-leaning parties initially but left-leaning parties catch up after 6 months.
• In emerging markets, equities tend to fall into elections and then rise afterwards. Indonesia, Taiwan, and South Africa markets tend to rise 6 months after elections. India and Mexico markets tend trade lower.
• Emerging markets prefer candidates representing change over continuity.