General Election Effect On Stock Market

Thus it can be surmised that an election s impact on stock prices would inevitably fall with a general trend of strength but expecting an increase in volatility may be the more likely outcome.

General election effect on stock market. In this study we investigate the influence of election on malaysian. When elections have been a close run affair markets have retreated. During the past general elections held in malaysia empirical evidence showed a significant election effect in stock volatility.

This included labour s wins in 1997 and 2001 and a conservative victory in 1987. This can cause greater volatility in the weeks prior. Over the course of time no election has resulted in permanent damage to the stock market.

Campaign uncertainty may break markets direction and increase volatility however this effect is short term. General elections may cause short term stock market volatility having minor impact long term the election impact on the stock market doesn t last long. The uncertainty of an election can also imply higher risk in certain stock prices especially those with greater impact to electoral outcomes.

After an election stock market returns tend to be slightly lower for the following year while bonds tend to outperform slightly after the election. Clear cut general election campaigns tend to have a positive effect on the stock market history suggests. When a new party comes into power the analysts found that stock market gains averaged 5 percent.

There was some turbulence during election day with stock futures but currently with democratic presidential candidate joe biden slightly leading in the electoral college the major stock indexes. The s p 500 has increased through time regardless of the who is in the white house. The market rose in eight out of the nine years the conservatives came out on top and delivered an average annual return of 10 8.