Data Point. Election euphoria

The euphoria over General Elections helped India’s benchmark indices – the Sensex and Nifty − jump by over 6 per cent in the past week.

But India was not the lone market to witness impressive rallies amid election hype. Five other countries – Thailand, Afghanistan, Iraq, Hungary and South Africa − that saw general elections so far this year have also seen positive momentum in the markets in the run-up to country-wide elections.

The rally in many of these indices commenced a month before the start of the elections. But, it was those trading below their historical peak valuations that saw the big jump.

The Borsa Istanbul XU030 Index, Afghanistan’s key index, currently trading at an attractive 11.3 times, has gained 23 per cent since March.

This is lower than its three-year high of 13 times.

Likewise, Thailand’s SET Index which trades at 16 times its historical earnings, lower than its recent peak of 20 times, has gained 14 per cent since January 2014. Interestingly, elections in both these countries proved to be a wash out, for different reasons though.

An early election in Thailand to resolve a political crisis ended in chaos following a boycott and voting disruptions in 69 of 375 constituencies by the key opposition. And now, the re-election first scheduled for March and later postponed to July has been called off once again.

Likewise, in Afghanistan, no party has been able to secure a majority and the country is heading for a re-election too.

But despite the uncertainty, the markets seem quite unconcerned by the delay in finalising a new government.

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