As populism makes its way around the world electorate, new candidates spout their own protectionist rhetoric. This has special implications for investors who benefit from free trade and fair business practices. Without governments upholding these principals, this puts your money at risk and reallocation should be considered.
Italy's election is between two anti-establishment, anti-EU parties that threaten European stability. If the center-right coalition wins, which looks likely, the Northern League party lead by Matteo Salvini "could end up in a position of power... a scenario that could disturb investors and EU policymakers."^1
Investors should be cautious of protectionist rhetoric, whether it's anti-EU, anti-immigrant, or anti-free trade. The EU is emblematic to free-trade and fair markets and the risk of dissolution can have damaging consequences for the entire world.
The world continues to move toward totalitarianism, giving rise to a protectionist President Trump recently initiating tariffs on steel and aluminum and Chinese President Xi, who recently removed term limits of his governance. Germany's Angela Merkel faces radical opposition from 28-year old Kevin Kuehnert, and Austria was lost to the far-right, 31-year old, Sebastian Kurz. Don't let their youth fool you. Their beliefs are anti-establishment as they’ve come to understand it. A rejection of the EU and, in consequence, free markets could have repercussions they have not experienced in their lifetimes.
As investors, not only should we redirect our resources into countries that are in alignment with our values, Canada and France, to name a couple, our actions will also have real implications on the countries choosing to ignore democratic values. This can be done by investing in companies based in those host countries or owning their indexes.
At Eureka Wealth Management, I stay on top of global politics and help my clients make smart choices with their investments. Directing investments to countries that promote fair markets and the rule of law will also serve to create portfolio gains. Visit eurekawealthmanagement.com or call (760) 537-0791 for a free portfolio review.
^1: Ft.com, 3/3/18, Salvini ensures immigration tops poll agenda