Why do politics affect Stock Markets?

Although politics and Stock Markets are different in their own functionality, are seen related in some or the other way. Every time when there are some changes in the political issues in any country it right away shows its influence on the National market. Last week the China’s benchmark stock index broke the symbolic 6,000-point mark for the first time ever. Know the reason why? One of the major reasons was the opening up of the 17th Communist Party Congress in Beijing by the nation’s top leaders. In one of the surveys conducted by a website, among the states of U.S, found that the economy reflects the position of the political parties in elections. Many more symbolic events have taken place in the history of stock markets of different countries on political basis. It seems that economy and politics go hand in hand.

The reason why? To a certain extent, it is observed that political uncertainty has a bigger impact on the stock markets than the performance of the economy. The reason for this may be that “for any economy to grow and prosper, it needs policies and reform measures that will be fruitful only over a long term implementation”. Overall, the direction of policies has been clear when there is a stable government. Be it, simplifying tax structures (direct and indirect), foreign direct investment policies, strengthening the financial system, government spending and reforms in public infrastructure and utilities. Investors feel that a stable political situation at the Centre is always beneficial for them. Since economy touches the life of each one of us in one way or the other, it becomes important for us to have our part in choosing the party that rules the state. Thus it’s interesting to see how...Politics influence world markets and economy impacts political stability!