Chart of the week: populism in a modern context

Populism in a modern context




Source: Tony Blair Institute for Global Change (as of 2018)

‘Populism,’ broadly defined as the idea that there is a ‘common people’ at odds with an ‘elite,’ has been a headline buzzword lately. While populism has been recently associated with Brexit in the UK and the election of Trump in the US, for example, populism has been gaining momentum since before the Global Financial Crisis in 2008.

The idea of populism can have political, economic and/or social implications. Currently it suggests a protest against declining traditions of or loss of control among a historically dominant group and often connotes an anti-establishment perspective.

This type of populist platform has succeeded in a number of jurisdictions thus far, including comedian Zelenskiy’s election as the president of the Ukraine and Jokowski’s re-election in Indonesia. In India, Modi’s cultural form of populism is expected to be given another five years. In Spain, populists on the left and right are well represented in parliament after recent elections.

Several notable elections are on the horizon. This spring, EU parliament elections commence and later this year, Greece will go to the polls, with populist parties expected to have a major presence in the respective legislatures. As a result of all the Brexit uncertainty, the UK may hold another general election, too. Additionally, the US is gearing up for its 2020 presidential elections.

What does all of this mean for markets? The past few years have taught us that positioning on geopolitical risk is extremely difficult. For example, current Indian asset prices reflect a re-election of Modi, which may or may not happen, sterling pricing does not reflect a no-deal Brexit while also failing to fully price-in other scenarios, and Greek five-year government bonds yield less than corresponding US Treasuries.

Populist risks to markets have already manifested themselves in the US-China trade wars and Brexit, however, and could continue as the result of other potential policies worldwide. For example, increased minimum wage can pressure corporate margins, regulations in the technology sector could significantly impact US large-cap firms, or price controls cause markets with a larger weighting in the utilities sector to sell off.

Through all the headline noise and uncertainty, and no matter how popular populism becomes, it’s important that investors monitor proposed policies and their associated risks.


The value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested.