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Home>UPDATE: Here's one slim opportunity to play the German election

UPDATE: Here's one slim opportunity to play the German election

UPDATE: Here's one slim opportunity to play the German election

09/20/2017

By Victor Reklaitis, MarketWatch

Watch Bund yields and market worries for a chance to jump in, says an analyst

Imagine having three children -- two who are drama queens, and one who is calm and mature, as if there were another grownup in the family.

The first two might represent recent United Kingdom and French elections that sparked outsize moves in markets. Meanwhile, Germany's upcoming ballot plays the part of the "strong and stable" child -- to borrow a Tory campaign slogan that failed to resonate with U.K. voters.

German Chancellor Angela Merkel looks set to cruise to her fourth term (http://www.marketwatch.com/story/merkel-is-sure-to-win-german-vote-maybe-2017-09-01), and the main question has involved which parties will team up with her Christian Democrats to form a governing coalition. Yet investors are still keeping an eye on the Sept. 24 federal election in Europe's largest economy, says Seema Shah, a London-based strategist for Principal Global Investors. It could provide investing opportunities, even though it doesn't look like a big market mover, she says.

Read:Who is Merkel up against in the German election, and what are their chances? (http://www.marketwatch.com/story/german-election-whos-merkel-up-against-and-how-could-they-shape-the-new-government-2017-08-31)

The June vote in Europe's second-biggest economy was a different story, as U.K. Prime Minister Theresa May's gamble to secure a larger Conservative majority backfired, sparking a slump in the pound (http://www.marketwatch.com/story/ballistic-pound-shoots-up-to-highest-level-since-brexit-vote-2017-09-15) for several sessions. That came a year after the Brits voted to leave the European Union, shaking up markets worldwide. And voters in France, the No. 3 economy, triggered a global rally for stocks in April, when they gave now-President Emmanuel Macron (http://www.marketwatch.com/story/french-president-macron-outlines-labor-reforms-2017-08-31) a victory in the election's first round.

"In the past year, the elections you've had in Europe -- as well as in the U.S. -- have gotten a lot of market attention, with at least before-the-election speculation that there could be a major change in policies," Shah says.

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