At the beginning of 2024, we were talking about the record number of elections that were going to take place worldwide over the course of the year.
Voters went to the polls in more than 60 countries this year, including in the world’s biggest economy – the US. Meanwhile, India (the world’s largest democracy) also saw voters going to the polls in what was a marathon seven-week national election.
National elections inevitably have a short-term impact on stock markets and, based on policy, can also influence longer-term returns during specific government terms. So, here’s how every big financial market performed in countries that held elections in 2024.
USA: S&P 500 Index = +27.6%
When we think of major elections, the United States often comes to mind first. This was especially true for the much-anticipated presidential election that took place in early November.
Ultimately, the election was less competitive than many polls had predicted, with Donald Trump securing a decisive victory over incumbent Vice President Kamala Harris. This marks Trump’s second term as President. Financial markets reacted positively overall, as his policies are generally perceived as pro-growth and business-friendly.
The S&P 500 Index surged more than 2% once it became evident that Trump would win. While other factors, such as the Federal Reserve’s interest rate cuts and the continued rise of Artificial Intelligence (AI) stocks, had already been driving market performance, his victory added further momentum.
Year-to-date, the S&P 500 Index has gained 27.6% as of December 18, 2024, positioning the U.S. stock market for its second consecutive year of returns exceeding 20%.
Read Also: Donald Trump Is US President (Again). Here Are 5 Things That Singapore Investors Should Take Note Of
India: NIFTY 500 = +18.0%
In India, there was significant optimism that Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP) would secure a landslide victory over the Congress Party in the May elections. However, the results defied expectations, with the BJP losing several parliamentary seats in provinces traditionally considered strongholds.
Prime Minister Modi’s BJP fell short of an outright majority in the lower house of parliament but managed to form a government through a coalition with partner parties. This outcome raised questions about Modi’s popularity with the Indian electorate and triggered a sharp initial decline in the Indian stock market.
Nevertheless, the market later rebounded, as the coalition government was viewed as a potentially positive development that could moderate Modi’s policies with input from coalition partners. By year-end, Indian equities had recovered strongly, with the benchmark NIFTY 500 Index up 18% in 2024 (as of December 18).
This performance is attributed mainly to robust corporate earnings growth among Indian companies and the potential for the Indian economy to benefit from ongoing geopolitical tensions in Asia.
Indonesia: Jakarta Composite Index = -2.2%
Indonesia, the world’s largest archipelago, held its presidential election this year, with former general Prabowo Subianto widely expected to win. As predicted, Subianto, who served as Defence Minister under President Joko Widodo (Jokowi), defeated his two rivals to secure the presidency.
Subianto’s victory was bolstered by the endorsement of his former boss, Jokowi, which played a significant role in influencing the final outcome. However, the world’s third-largest democracy continues to face challenges, including the impact of higher U.S. interest rates and a weaker currency.
Although the Jakarta Composite Index (JCI) reached an all-time high in September, uncertainty about the policies of the incoming administration has tempered market enthusiasm. Concerns over the pace of U.S. interest rate cuts have further dented investor confidence, leading to a roughly 10% decline in the index since its peak.
As a result, the JCI has delivered a slightly negative return of -2.2% for 2024 so far (as of December 18).
UK: FTSE 100 Index = +6.1%
In the UK, it was widely expected that the Labour Party would defeat the Conservatives (commonly known as the Tories) in the general election. This expectation was driven by widespread dissatisfaction with the Tories’ handling of the economy and their inability to address rising living costs.
As anticipated, Labour’s leader, Sir Keir Starmer, was elected as the new Prime Minister in early July. While the new Labour government has outlined plans for increased spending and tax reforms, it is the Bank of England’s (BOE) interest rate cuts that have provided a much-needed boost to the broader stock market.
The BOE has implemented two rate cuts in 2024, with the most recent occurring last month. In addition to rate cuts, the stabilisation of the British Pound has helped restore market confidence following the currency’s sharp decline during the “mini-budget” crisis under former Prime Minister Liz Truss in late 2022.
Overall, the FTSE 100 Index has risen 6.1% so far in 2024.
Japan: TOPIX Index = +14.5%
Japan, home to one of Asia’s largest stock markets, held its general election in October, resulting in a significant political shift. The ruling Liberal Democratic Party (LDP) lost its parliamentary majority for the first time since 2009. Despite this setback, Prime Minister Shigeru Ishiba retained his position, though the party faced voter backlash over political funding scandals that had tarnished its reputation.
Interestingly, the political turmoil did not hinder Japanese stocks from delivering strong performance in 2024. The stock market reached all-time highs during the year, buoyed by the Japanese economy’s emergence from deflation and a shift toward “normalised” monetary policy by the Bank of Japan (BOJ).
In March, the BOJ raised interest rates into positive territory for the first time in 17 years, marking a pivotal moment for the economy. Additional positive factors, such as higher wage growth and robust corporate earnings, helped offset concerns over a weaker Japanese Yen.
Year-to-date, the benchmark TOPIX Index has gained 14.5% in yen terms. However, currency depreciation has tempered these gains in dollar terms, with the index up approximately 10.5% in USD as of December 18, 2024.
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