Recent reports of a possible strikes on Iran have driven up oil prices. The dismissal of Bo Xilai could signal a major change in emerging economic model for China. And upcoming U.S. elections seem to have all new legislation on hold.
Investors and markets react to political news from around the world.
Nomura's senior political analyst Alastair Newton is out with his report Issues Which Keep Me Awake At Night.
These are the 10 political risks that could rattle markets in 2012. Newton ranks the issues based on relevance to investors.
Enrique Pena Nieto, former governor of Mexico State
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"We believe that the publication on 20 March of the Republican Party’s budget
proposals has reinforced the difficulties involved in reaching cross-party
agreement on a range of fiscal issues before the 6 November elections.
Failure to reach agreement by year-end would result in a significant fiscal ‘hit’ to the economy from 1 January 2013 with the Bush tax-cuts due to expire and the imposition of automatic spending cuts, plus the need to raise the debt ceiling.
Meanwhile, we see a non-negligible possibility that Congress could pass anti-China legislation as the US election nears, even though the Brown-Schumer bill approved by the Senate last year is bogged down in the House."
Source: Nomu
Failure to reach agreement by year-end would result in a significant fiscal ‘hit’ to the economy from 1 January 2013 with the Bush tax-cuts due to expire and the imposition of automatic spending cuts, plus the need to raise the debt ceiling.
Meanwhile, we see a non-negligible possibility that Congress could pass anti-China legislation as the US election nears, even though the Brown-Schumer bill approved by the Senate last year is bogged down in the House."
Source: Nomu
"...Major challenges remain, notably …In Spain, the government looks set to
face escalating protests against measures consistent
"Even though the Iranians look set to return to the negotiating table next
month, we see little prospect of Tehran being deflected from its nuclear
ambitions. We therefore expect tensions to be sustained and possibly to escalate
in the coming weeks.
Furthermore, a sharp deterioration in governance and the security situation in Iraq since the US troop withdrawal could endanger its output of up to 3.4mbpd. …Overall, we expect perceived political risk (including around Nigeria and Venezuela) to continue to exert upward pressure on the oil price in 2012 despite recent efforts by Saudi Arabia in particular to calm markets."
Source: Nomura
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Furthermore, a sharp deterioration in governance and the security situation in Iraq since the US troop withdrawal could endanger its output of up to 3.4mbpd. …Overall, we expect perceived political risk (including around Nigeria and Venezuela) to continue to exert upward pressure on the oil price in 2012 despite recent efforts by Saudi Arabia in particular to calm markets."
Source: Nomura
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