The outcome of the recent election in the Netherlands, held on 15 March 2017, delivered a surprise result to markets when Geert Wilders’ populist right Freedom Party (PVV) “did less well than expected”, said Franklin Templeton fixed income group head of European fixed income David Zahn.
“Another vote, and another surprising result, this time from the general election in the Netherlands, but the difference between the outcome of this week’s Dutch election and previous ballot-box surprises is that the expected far-right populist surge failed to materialise,” Mr Zahn said.
“In that respect, the result was more interesting than anticipated. We see it as especially notable that for all the talk of a rise in populism across the world, in this case the majority partner in a ruling coalition has actually done better than initially expected.”
This result, Mr Zahn said, suggested that markets “may not see the surge in populism expressed in opinion polls actually play out in other 2017 elections in Europe”, but cautioned investors against trying to extrapolate this outcome out to the upcoming French elections, being held on 23 April 2017.
“This result may lead markets to downplay the likelihood of a Le Pen presidency, and for that possibility to be priced out,” Mr Zahn said.
“However, we believe investors should be cautious of the sort of complacency that was prevalent around the United Kingdom’s Brexit vote and the US presidential election. In our view, there’s a possibility Le Pen could win in the second round of voting in May — albeit a low one.”
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