Why investors are unwise to bet on elections

To meet the world’s biggest news junkies, head not to Washington or Westminster. Instead, make your way to a trading floor, where information from every corner of the globe must be parsed the instant it emerges. Whatever the news, from coups to company-earnings reports, it probably affects the price of something. This year, amid a seemingly never-ending series of elections, the addicts are not short of a fix. Electorates representing most of the world’s population are heading to polling booths, and not just market-makers but investors everywhere face the tantalising prospect of trading on the results.The rewards of doing so successfully are difficult to ignore, since an incoming government has a huge capacity to influence investors’ returns. Its fiscal decisions will alter the course of sovereign-bond yields, company profits and foreign-exchange rates. Subsidies, tariffs and regulation will determine which industries get a boost and which are knocked for six. Less tangible, if no less important, the vibes that a new administration gives off concerning trade, cross-border investment and commerce in general will help decide whether foreign capital floods in or beats a quiet retreat. It all hits the bottom line.