Leaders and markets

The Indian equity market has been on an upswing after the appointment of Narendra Modi as prime minister. An analysis by Deutsche Bank reveals reforms and development-oriented leaders have, historically, spurred equity markets. While the 12-month equity market returns in the US and the UK after the appointment of Ronald Reagan as president and Margaret Thatcher as prime minister were a negative 12 and seven per cent, respectively, other markets under economy-focused leaders have delivered phenomenal returns. In the cases of Deng Xiaoping (China), Recep Tayyip Erdogan (Turkey) and Luiz Inácio Lula da Silva (Brazil), the respective stock markets rallied 63, 84 and 93 per cent in 12 months of their assuming office. The report says, "We believe India's current political situation is analogous to the mentioned cases, where right economics became right politics. We remain confident India's new government will deliver on its economic agenda, which should drive equity returns."