As we approach the halfway mark of 2024, I figured it’d be constructive to check in on the results of this year’s record-breaking elections. The numbers are particularly striking: Approximately 4.2 billion people are believed to be casting ballots this year, representing half of the world's population and 68% of global equity market cap.

The implications for investors are profound, with several key elections likely to shape global markets and economies in the months and years to come. At U.S. Global Investors, we like to say that government policy is a precursor to change, and if that’s the case, we may be in for some serious change.

The EU’s Rightward Tilt

One of the most consequential political developments so far this year has been the rightward shift in the European Union. The recent elections for EU Parliament saw far-right parties making substantial gains across many of the bloc’s 27 member states.

This conservative groundswell has been driven by growing frustration over the migrant crisis, which I previously wrote about, and discontent with regulations on climate change and other issues that are perceived to disproportionately affect rural residents. The European economy has also been largely stagnant since the financial crisis, fueling dissatisfaction with the status quo.

These same issues motivated voters in the United Kingdom to approve Brexit eight years ago.

The surprising scale of the far-right’s victories is turning heads in the U.S., where President Donald Trump continues to poll higher than incumbent Joe Biden, though the race has narrowed considerably since Trump’s guilty verdict in his Manhattan hush money case.

Modi Scores a Third Term

In India, the world’s largest democracy, Prime Minister Narendra Modi secured a third consecutive term, but he returns with a diminished majority. The Bharatiya Janata Party (BJP) failed to win the required 272 seats to form a majority government on its own, resulting in a coalition government.

The market reacted negatively to the reduced majority, with a $371 billion selloff and foreign investors selling a record $1.4 billion worth of shares.

Despite this initial reaction, Modi’s historic reforms are expected to continue driving economic growth. The International Monetary Fund (IMF) estimates that India will see its real gross domestic product (GDP) advance nearly 7% this year, ranking the country among the world’s fastest growers. The BJP is likely to push ahead with developing India's manufacturing sector during Modi’s third term, though he will now have to contend with coalition allies, which could slow the process.

Mexico to Become Less Friendly to Business?

Mexico hosted its largest election ever earlier this month, with over 20,000 local, state and federal offices on the ballot. Claudia Sheinbaum, the candidate from the National Regeneration Movement (Morena), claimed victory with a stunning 30% margin, the equivalent of 38 million votes, making her the first woman president of not just Mexico but any North American country.

A climate scientist and former mayor of Mexico City, Sheinbaum is set to continue many of the policies of the outgoing president, Andrés Manuel López Obrador (“AMLO”). Unlike Modi, Sheinbaum will enjoy a congressional supermajority, giving her a better chance of amending Mexico's constitution, including potentially nationalizing the country’s power generation. This could lead to a less business-friendly environment, creating challenges for investors in the Mexican market.

The Mexican peso has faced pressure since the election, with the USD/MXN exchange rate reaching levels unseen in over a year following Sheinbaum’s announcement that judiciary reform would be an early focus for the new congress in September.

Looking Ahead to November

Arguably, the most watched election of 2024 will be the upcoming U.S. presidential race. According to RealPoliticsPolling, which aggregates various national and statewide polls, Biden continues to trail Trump in favorability, despite the latter’s criminal guilty verdict. Most Americans cite the economy and inflation as the most important issues influencing their vote.

Yesterday, Trump unveiled his plan to eliminate income taxes by replacing them with an all-tariff policy. During his administration, the former president was a major proponent of tariffs, and he’s widely expected to leverage them again should he be reelected. However, to achieve what Trump is proposing would likely require an amendment to the Constitution, a hard sell in today’s hyper-partisan, divisive political climate.

At U.S. Global Investors, we continuously monitor these developments to provide you with insights and strategies. Understanding that government policy is a precursor to change will be key to making informed investment decisions the remainder of this year and beyond.

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