Wall Street and Elections in Latin American Emerging Economies

Political cycles represent a core issue for capital markets in developing and emerging countries. This paper analyses the intricate links between financial markets and emerging democracies and highlights changes in the ways analysts and investors react to political cycles in emerging markets. Financ...

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Bibliographic Details
Main Author: Nieto Parra, Sebastián
Other Authors: Santiso, Javier
Format: eBook
Language:English
Published: Paris OECD Publishing 2008
Series:OECD Development Centre Working Papers
Subjects:
Online Access:
Collection: OECD Books and Papers - Collection details see MPG.ReNa
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520 |a Political cycles represent a core issue for capital markets in developing and emerging countries. This paper analyses the intricate links between financial markets and emerging democracies and highlights changes in the ways analysts and investors react to political cycles in emerging markets. Financial markets have, in the past, been particularly sensitive to political events. All the major financial crises in Latin America of the past decade and a half took place during an election year. Even in 2006, an unusually calm period in light of the number of presidential elections, markets remained highly sensitivity to elections: the day following Felipe Calderón's narrow victory in July's 2006 Mexican presidential elections, the stock market gained almost 5 per cent in a day, bond prices soared and the peso saw its biggest one-day appreciation in six years