Elections and Political Risk: New Evidence from Political Prediction Markets in Taiwan

We examine the effects of party platforms on the economic opportunities of firms using a unique data set from a political prediction market in Taiwan, a country with two dominant parties whose political cleavage derives mainly from a single issue: the “One China Principle”. We find that during the 2008 Presidential campaign, the share price of Taiwanese firms with investments in the mainland responded strongly and positively to a positive electoral outlook for the KMT, the party which advocates lifting caps on cross-strait investment in mainland China. The response is strongest for those firms who have already hit their caps.Partisan Effects, Taiwan

Comparative of Stock Price Before and After Indonesian Presidential Election in 2014 of Lq-45 Stock Listed on Idx

Recently, investors have knowledge on investment for their future benefits. Then, as time goes by, they found out that information about some events may have a significant influence on the performance of the stock price and it makes them worry if this kind of event could affect the price of their shares, especially the price of LQ-45 stocks. One of the events that may affect the stock price is presidential election because it is macroeconomics factor that affect all aspects in the country including investment. This research conducted to identify the significant change of the stock price and to know if this event has an effect on price of LQ-45 Stock. This research uses Time Series Analysis, Paired Sample t-Test and purposive sampling method where the sample of this research is all LQ-45 stocks in IDX. The correlation result finds that there is a relation between stock price and presidential election. There is also a significant change on stock price after the presidential election. Therefore, it concluded that event such as presidential election is one of the factors that affect the performance of the stock price and investors recommended to be more cautious of information while doing stock transaction, and makes better investment. Keywords: stock price, presidential election, event stud

Healthcare Stocks and Presidential Elections

In this study I examine the impact presidential elections have had on health care stock returns. Through my own data collection and analysis, I sought to examine the performance of stocks across election cycles in addition to the performance of healthcare stocks across election cycles. Using data from 1998-2019 I find that 1.) In election years, the stock market underperforms relative to non-election years; 2.) Healthcare stocks underperform the broader market during election years; 3.) The impact on healthcare stocks is consistently poor in election years yet contained to only that year; 4.) The Presidential Election Cycle, stating that stocks underperform in the first half of a presidential term and underperform in the back half, does not fully hold true in the twenty-first century. I attribute the results to the fact that health care stocks are further affected by political developments and regulation in addition to a significant increase in media coverage surrounding presidential elections in the twenty-first century. As healthcare becomes a larger part of the US economy, the necessity for the government to step in and regulate has increased dramatically in the past few decades, leading to stocks in the sector being more susceptible to changes in government and policy. As society has entered a new age of technology and media, coverage of political events has increased dramatically leading to more coverage, opinions and rhetoric surrounding elections. This has caused traders to react more heavily to events surrounding the political arena throughout the year, driving underperformance in the market and in healthcare stocks

Are Donald Trump and Hillary Clinton Controlling the Stock Market? An Analysis of the 2016 Presidential Election\u27s Impact on Stock Market Volatility

Hillary Clinton and Donald Trump ran highly controversial campaigns in the 2016 Presidential Election, which then leaves us with the question of what impact is this having on the current economy? Prior analysis of political influence on the stock market tells us that isolating political impact on the stock market is nearly impossible. However, there are clearly defined 4-year cycles in stock prices that seem to correspond with election years. In this paper, I create my own index of stocks in the four major U.S. industries and measure both day-to-day and intraday volatility in stock prices across three comparable time periods: the year leading up to the 2016 election, all election years excluding the 2016, and all non-election years. I found that the 2016 election year was significantly less volatile than both prior election years as well as non-election years, suggesting that the 2015-2016 election year was not a closely contested race

U.S. PRESIDENTIAL ELECTIONS & THE STOCK MARKET

ABSTRACT An extensive body of literature indicates that political uncertainty has an impact on the price and riskiness of financial assets. Countries with a stable political field offer companies a more predictable and reliable working environment. In developed countries, presidential elections are one of the most influential political events. United States is the world’s largest economy and the office of the president has a lot of power compared to many other developed countries. Therefore, it is intuitively plausible that U.S. presidential elections could affect the stock markets as well. Previous literature has focused on three main types of election effects: the short-term effects, the election cycle effect over the four years of the U.S presidential mandate, and the party effect, whether it’s a Republican or a Democrat candidate who wins the election. The purpose of this thesis is to examine the short-term effects that the U.S. presidential elections have on the stock market. The data consists of daily price data from six major world indices and five presidential elections from 2000 to 2016. A special focus is on the 2016 elections. To examine the stock market reaction to the elections, an event study methodology is employed. The abnormal returns from the first trading day after the election result was announced are examined, along with three longer event windows to better grasp the stock market reactions to the elections. The results indicate that U.S. presidential elections have a short-term impact on the stock markets, both in terms of returns and market volatility. This effect seems to be larger and clearer for U.S. markets than foreign markets. U.S. indices also behave very similarly, suggesting that diversifying across domestic markets will not protect investors from domestic political risks. Certain industries, however, are impacted differently. In particular, industries that are sensitive to regulations and government policies are impacted more. Furthermore, these types of industries seem to prefer Republican winners over Democratic ones. The results for international markets are more mixed. Overall, European markets seem to follow their U.S. counterparts more closely than Asian markets. In some cases, Asian indices even exhibited opposite reactions than U.S. markets. In the light of these results, investors should consider political elections and their effects on assets when making investment decisions

Does the US Presidential election cycle impact Nordic stock returns? : Evidence from Finland, Sweden, Denmark, and Norway

The US Presidential election cycle and its influence on the economy and stock markets is a widely studied upon phenomena. The significant power that the US President has over the Western world cannot be ignored from an economic viewpoint. The partisanship of US politics creates a great struggle between the two major parties, the Democrats and Republicans, where even a small number of votes may influence numerous aspects of life in the US and even internationally. The decision-making power of the US President has a significant impact, for instance on job creation, government spending, taxation, environmental policies, foreign trade, and global politics. In previous studies, there have been three major areas when studying the relationship between the US President and the stock market. The first line of study focuses on how the US Presidential election affects the stock market in the short-term. The second concentrates on how the four- year US Presidential election cycle influences stock market performance, whilst the final verdict is focused on the partisan effect on the stock market, in which stock market performance is evaluated based on the political party of the US President. Although the effects of the US Presidential cycle and the stock market are widely studied domestically, the emphasis on the international effects is minimal. The purpose of this study is to examine whether the long-term effects of the US Presidential elections can be found in Denmark, Sweden, Finland, and Norway. The emphasis of this study is around the four-year election cycle and whether the empirical findings from the US markets spillover to the Nordic markets. The empirical tests are divided into three, one focusing on whether the stock market performance during the second year differs from the rest of the term. The second empirical test examines whether significant differences in market returns exist between the two halves of the Presidency, and finally whether US information variables influence Nordic stock markets. The monthly data applied in the empirical tests span from November 1992 to October 2020, covering seven Presidential terms. The results convey that the US Presidential election cycle does not have an impact on the Nordic stock markets. Although the Nordic stock markets underperform during the second year of the US Presidency, the returns do not significantly vary across the overall cycle. Moreover, the Nordic stock market returns do not significantly differ between the two halves of the US Presidency. Finally, the ordinary least square regressions indicate that the US information variables have no significant explanatory power over the Nordic stock market returns.Yhdysvaltain presidentinvaalien sykli ja sen merkitys talouteen ja osakemarkkinoihin on suhteellisen laajasti tutkittu ilmiö Yhdysvalloissa. Yhdysvaltain presidentillä on kuitenkin merkittävää poliittista ja taloudellista vaikutusvaltaa myös länsimaisissa yhteiskunnissa. Joka neljäs vuosi kandidaatit jotka edustavat joko demokraatteja tai republikaaneja kilpailevat intensiivisesti vaaleihin asti, jolloin pienemmätkin marginaalit voivat luoda merkitystä. Puolueiden edustajien poliittiset erot sekä Yhdysvaltain presidentin vaikutusvalta yhdessä vaikuttavat olennaisesti muun muassa työpaikkojen syntymiseen, julkisiin kustannuksiin, verotukseen, ympäristöön liittyviin päätöksiin, ulkomaankauppaan, sekä kansainväliseen politiikkaan. Aikaisemmat tutkimukset koskien Yhdysvaltojen presidenttiä sekä osakemarkkinoita ovat keskittyneet kolmeen eri aiheeseen. Ensimmäinen tutkimusaihe tarkastelee Yhdysvaltojen presidentinvaalien vaikutusta osakemarkkinoihin lyhyellä aikavälillä eli kuinka esimerkiksi vaalipäivä tai vaali-viikko vaikuttavat osakemarkkinoihin. Toinen tutkimusaihe analysoi neljän vuoden presidenttisyklin vaikutusta osakemarkkinoihin. Kolmas aihe aikaisemmissa tutkimuksissa on keskittynyt Yhdysvaltojen kaksipuoluejärjestelmän vaikutukseen osakemarkkinoilla, tarkastellen puolueen vaikutusta tuottoihin sekä riskeihin. Vaikkakin Yhdysvaltojen presidentinvaalien vaikutusta osakemarkkinoilla on tutkittu laajasti aikaisemmissa akateemisissa tutkimuksissa, ovat ne keskittyneet tarkemmin Yhdysvaltain sisäisiin vaikutuksiin, jolloin kansainvälisiin vaikutuksiin keskittyneet tutkimukset ovat olleet harvinaisempia. Tämä tutkimus tarkastelee Yhdysvaltojen presidentinvaalien pitkäaikaisvaikutuksia Tanskan, Ruotsin, Suomen sekä Norjan osakemarkkinoiden toimintaan. Lisäksi tässä tutkimuksessa keskitytään Yhdysvalloissa neljän vuoden välein järjestettäviin presidentinvaaleihin sekä niiden sykleihin yleisesti ja tutkitaan, mikäli aikaisemmissa tutkimuksissa havaitut empiiriset tulokset heijastuvat Pohjoismaisiin osakemarkkinoihin. Yhdysvaltojen presidentinvaalien vaikutusta osakemarkkinoihin on tutkittu kolmella eri tavalla aikaisemmassa kirjallisuudessa. Tässä työssä ensimmäinen tutkimuslinja tarkastelee sitä onko Yhdysvaltojen presidentin toisella virkavuodella heikentävää vaikutusta osakemarkkinoiden tuottoihin Pohjoismaisilla osakemarkkinoilla. Toinen tutkimuslinja aikaisemmassa akateemisessa kirjallisuudessa tutkii sitä, onko ensimmäisten virkavuosien osaketuotoissa merkittävää eroa verrattuna myöhempiin Yhdysvaltojen presidentin virkavuosiin ja sen vaikutuksiin tuotoissa. Kolmas empiirinen tutkimus perustuu siihen, että mikäli Yhdysvaltojen informaatiomuuttujilla on vaikutusta Pohjoismaisiin osakkeisiin. Jokaisessa kolmessa empiirisessä tutkimuksessa on hyödynnetty kuukausittaisia Pohjoismaisia hintaindeksitietoja, jotka perustuvat aikaväleille marraskuu 1992 ja lokakuu 2020, täten tutkien seitsemää yksittäistä sykliä presidentinvaalien välissä. Tämän tutkimuksen empiiriset tulokset osoittavat, että Yhdysvaltain presidentinvaalien sykleillä ei ole merkittävää vaikutusta Pohjoismaisten osakemarkkinoiden tuottoihin. Vaikkakin Pohjoismaisten osakemarkkinoiden tuotot ovat keskimäärin heikompia toisen virkavuoden aikana, ne eivät poikkea tilastollisesti merkittävästi koko syklin keskimääräisistä tuotoista. Lisäksi, tämän tutkimuksen toinen empiirinen tutkimus osoittaa, että ensimmäisen ja toisen puoliskon keskimääräiset osakemarkkinoiden tuotot eivät poikkea toisistaan tilastollisesti merkittävällä tavalla. Viimeisenä, empiirisessä osiossa sovelletut regressioanalyysit osoittavat, että yhdysvaltalaiset informaatiomuuttujat eivät tilastollisesti merkittävällä tavalla perustele Pohjoismaisia osaketuottoja. Vaikkakin tämän tutkimuksen empiiriset tulokset osoittavat, että Yhdysvaltain presidentinvaalien sykli ei vaikuta merkittävästi Pohjoismaisiin osakemarkkinoihin, tutkimuksen aikavälillä syklin vaikutusten esiintyminen Yhdyisvalloissa on myös hyvin epätodennäköistä. Yksi merkittävimmistä syistä syklin esiintymättömyydelle Pohjoismaissa vuosien 1992-2020 välillä on kaksi merkittävää pörssiromahdusta neljännen virkavuoden aikana vuosina 2008 ja 2020. Nämä kaksi romahdusta olivat globaaleja ilmiöitä ja täten laskivat osakemarkkinoiden tuottoja koko presidentinsyklin aikana, sekä laskivat osakemarkkinoiden keskimääräisiä tuottoja toisen puoliskon aikana

Stock return, currency and general elections

The association between political elections and stock market performance for Malaysia market is discussed in this paper. This study aims to investigate the impact of General Elections in Malaysia on stock market indices. To provide additional support of the impact of general elections on stock returns through other channels, currency changes were also included in this study so as to discover the mediation effect of the exchange rate on the relationship between general elections and stock returns. Since the exchange rate does, to some extent, influence stock return, the relationship between exchange rates and stock returns during different stages of a general election cannot be overlooked. The results showed that currency change is negatively related with stock returns in pre-election and post election stages, but it is not significant during the election period. The impact of currency on stock return exists as a mediation effect during election period. In a nutshell, the currency change directly impacts stock return with a negative influence. However, the direct relationship between currency and stock return disappears during the election week. Thus, stock return is affected by currency change indirectly

Presidential election and the initial public offering performance : the Trump case

Mestrado em FinançasEste estudo representa a minha dissertação, que terá como foco a Oferta pública inicial de ações (IPO). Este consiste na análise do impacto que determinados momentos de mudanças políticas e/ou económicas poderão ter na performance dos IPO?s, examinando em concreto a eleição de Donald J. Trump, doravante denominado como Trump, para Presidente dos Estados Unidos da América (EUA). Sendo que Trump tem sido alvo de grande polémica por todo o mundo, devido à sua propensão para criar um impacto em grande escala na sociedade com os seus métodos e ideologias, será, portanto, de enorme interesse e valor para o meu mestrado, o estudo da influência que este terá no mercado financeiro. O meu objetivo é dar um contributo à comunidade científica ao juntar duas realidades distintas: o Mercado acionista e o Ambiente político. Através do estudo dos IPO?s lançados no momento anterior e no momento posterior à eleição de Trump, a sua performance será o objeto de estudo e a principal ferramenta para analisar o impacto que este momento de instabilidade económica e política, bem como as políticas relacionadas com o mercado acionário tiveram no mesmo. De modo a chegar a determinadas conclusões, foi utilizada estatística descritiva, bem como foi desenvolvida uma análise estatística, baseada no número de IPO?s e na taxa de rendimento médio das ações. Esta análise assenta em definições inerentes ao Estudo de Evento, largamente utilizado por vários autores, nomeadamente o conceito de janelas de evento, que teve grande utilidade na separação dos 3 momentos de estudo.This study represents my dissertation, which will focus on the Initial Public Offering (IPO). This is an analysis of the impact that certain moments of political and / or economic change may have on the performance of IPOs, specifically examining the election of Donald J. Trump, hereafter referred to as Trump, as President of the United States of America. Since Trump has been the subject of such controversy around the world, because of his propensity to create a large-scale impact on society with his methods and ideologies, it will therefore be of enormous interest and value to my master's degree, the study of its influence on the financial market. My goal is to contribute to the scientific community by bringing together two distinct realities: the stock market and the political environment. Through the study of the IPOs launched before and after Trump's election, their performance will be the object of study and the main tool to analyze the impact that this moment of economic and political instability, as well as the policies related to the stock market had in it. In order to reach certain conclusions, descriptive statistics were used, as well as a statistical analysis based on the number of IPOs and the average yield of the shares. This analysis is based on definitions inherent to the Event Study, widely used by several authors, namely the concept of event windows, which was very useful in separating the 3 study moments.info:eu-repo/semantics/publishedVersio

Test of Linkage between Governance Style and National Economic Indices

Published by Sciedu Press. This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/)The relationship between the deliberate reinvention of the wheel, for macroeconomic indices such as interest rate, inflation, exchange rate, stock prices, index of industrial output within the electoral windows and the political parties’ (incumbent and opposition) ideology is the focus of this study. Monthly macroeconomic data for UK, USA, Japan, China, Hong Kong, Egypt, South Africa, Brazil, Nigeria, France and Germany from Morgan Stanley Capital International (MSCI) as well as World Bank for the period of 2000-2015 were used in the study. Employing majorly, the dynamic Generalised Method of Moment (GMM) estimation technique, the study reveals that the coefficients of partisanship effects have the same negative signs and is significant for all the countries except Nigeria and Egypt. Also, the coefficients are similar in terms of size (US and China). Hence, the results show that party orientation does have significant impact on stock market returns of the selected countries with greater impact on Nigeria and Egypt. Strengthening the various regulatory agencies in charge of these macroeconomic policies is recommended to avoid this unnecessary manoeuvring in governance. We are of the view that automation of capital markets activities will reduce the chances of manipulating capital market economic data.Peer reviewedFinal Published versio