The Impact of Political Unrest

Goals

To identify 10 companies whose stock prices are expected to rise or decline the most, respectively. Their share price movements are attributed to the political unrest after the US presidential election on November 3, 2020. The rationales underlying stock price dynamics help understand the impact of political unrest on the US economy and stock prices.

Early Findings

  • Despite political unrest being seen as a factor that causes significant stock price movement, it is a short-term impact and associated with the uncertain outcome of the US presidential election at this stage. Financial experts suggest taking a long-term view of rebalancing portfolios or profiting from companies that are perceived to have already performed well.
  • Amid the political risk associated with the US presidential election, the companies in the aerospace & defence sector are expected to see improvement in business and stock price performance.
  • The health care industry in the US is one of the economic sectors that are most sensitive to political risk. Within the sector, the health care service&equipment industry is expected to see a rise in stock prices, while the biotech industry is expected to see a down performance. The main component of the political risk is attributed to different policies adopted by the Democratic and Republican parties. Different sectors are affected to a different degree due to policy changes, such as taxation and regulation, if the Democrat wins the election (a more likely outcome).
  • The technology industry, especially large enterprises, is expected to be more sensitive to political factors, such as the risk of disrupting the function of the federal government or continued social unrest. Companies, such as Amazon, Apple, Facebook and Google, could be negatively affected by the win of the Democratic party. However, the outcome of the political risk after the election in November remains uncertain and to be a significant tail risk to investors.

Summary of Early Findings

  • Early findings identify some industry sectors that could be impacted most by the political risk or unrest associated with the US presidential election in November 2020.
  • In the public domain, there is limited information on stock price performance at the company level. This is likely due to the fact that unrest scenarios linked to the election outcome, such as a clean Democratic sweep, Democratic president with a Republican senate, and a disputed Biden or Trump victory, are highly uncertain at this stage.
  • However, we propose to identify the requested 20 companies based on the industry sectors and the leading public companies in each sector.

Proposed next steps:

You need to be the project owner to select a next step.