By Libby George and Dhara Ranasinghe
LONDON, Feb 2 (Reuters) - From Japan to Brazil, elections could add yet more uncertainty this year to markets already whipped by U.S. policy gyrations and heightened geopolitical tension.
Japan’s election this coming weekend is among the most unpredictable in years, while polls across Latin America will test the region’s rightward shift.
Here are some of the year’s most significant elections for markets:
JAPAN
Japan’s snap election on February 8 could loosen fiscal purse-strings in the developed world’s most indebted nation, on a debt-to-GDP basis. Prime Minister Sanae Takaichi wants to convert personal popularity into support for her expansionary fiscal policies and bolster her coalition government’s position in parliament. Latest polls s…
By Libby George and Dhara Ranasinghe
LONDON, Feb 2 (Reuters) - From Japan to Brazil, elections could add yet more uncertainty this year to markets already whipped by U.S. policy gyrations and heightened geopolitical tension.
Japan’s election this coming weekend is among the most unpredictable in years, while polls across Latin America will test the region’s rightward shift.
Here are some of the year’s most significant elections for markets:
JAPAN
Japan’s snap election on February 8 could loosen fiscal purse-strings in the developed world’s most indebted nation, on a debt-to-GDP basis. Prime Minister Sanae Takaichi wants to convert personal popularity into support for her expansionary fiscal policies and bolster her coalition government’s position in parliament. Latest polls show her approval rating has slipped a touch.
Investors expect pressure on Japanese bonds to continue, and some analysts reckon 10-year yields will hit 3% this year, from just over 2% now.
COLOMBIA
Colombians will vote as many as three times, starting in March, to choose new legislators and a new president to replace Gustavo Petro, a leftist who has clashed with U.S. President Donald Trump.
Colombian stocks outperformed regional peers last year, but bond investors hope Latam’s rightward shift will sweep up Colombia, too, restoring orthodox economic policies.
"If there is a change to the right...there’s potential for some fiscal adjustment," said Ninety One portfolio manager Nicolas Jaquier.
Jaquier said a victory for Ivan Cepeda of Petro’s coalition could allow him to make structural changes at the central bank and supreme court - removing roadblocks that slowed some of Petro’s policies.
HUNGARY
Hungary’s April vote is the opposition’s best chance in years to end Prime Minister Viktor Orban’s 16-year-long run.
Centre-right party Tisza has a polling lead over Orban’s right-wing Fidesz, but the outcome remains uncertain.
Cost of living concerns are high, and Orban has used fiscal giveaways to assuage voter worries.
Fitch Ratings cut Hungary’s credit rating outlook to negative last year, citing "significantly worsened" public finance projections that reflected new measures in advance of the election.
Tisza has pledged to repair ties with the European Union and unblock funding. Citi’s Luis E. Costa estimates that could mobilise 10 billion euros ($11.9 billion), which alongside other reforms could "enable higher investment spending, accompanied by a lower fiscal deficit and reduced risk premia".