Dutch Election in the limelight - BBH

In view of the analysts at BBH, Dutch Election will be keenly watched by the investors this week as judging by the developments in the credit markets, investors are not as worried about the prospect of the populist-nationalist forces winning as the media seems to be.  

Key Quotes

“The fragmented nature of Dutch political parties requires coalitions, and this serves as the ultimate check on the Freedom Party and Wilders' agenda.  It will take some time to sort out the results and form a new government, which may entail the inclusion of four or five political parties.”

“The hubris of small differences may make it difficult to form a government in the first place or lead to a fragile government.  A stronger than expected showing for the Freedom Party (PVV), of say 26 seats (150-seat chamber) could elicit a market reaction, but in lieu of this, the market impact is likely to be minor.  The generally expected outcome that a new government excludes the PVV might encourage investors and observers to question the main narrative that populism-nationalism is sweeping across Europe and the US.  To the extent that the populist-nationalist agenda entered the governments in the US and UK was when the main center-right party adopted.  In Europe, the center-right parties are running against the populist-nationalist parties.”

“Turkish/Dutch tensions rose over the weekend.  The Dutch refused to let Turkey's foreign minister enter the country to campaign, took another minister to the border, earning the wrath of Turkey's Erdogan.  The Rutte government is credited with handling the affair well, and although supporters for the Freedom Party may have become more enthusiastic, the PVV does not appear to be growing its base.”