International politics and multilateral relations. The influence of politic events on the international stock exchange (PDF)

Seminar paper from the year 2018 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, University of applied sciences, Siegen, language: English, abstract: The aim of this term paper is, to find out which influence political events have on the international stock market. To clarify this question, first of all the basic concepts of the stock market and international politics are explained. Based on these fundamentals, the approach of the realistic theory of Hans Morgenthau is considered. In addition, direct and indirect influences of politics are presented and discussed.

The following explains the basic principle of the stock market and various products with their specific characteristics. Subsequently, the effects of direct influences on and the effects of indirect influences on the stock market are examined. Practical examples show what investor behavior can be observed and whether one can recognize recurrent patterns of behavior for particular types of events.

Not only events, like elections and referendums have indirect influence on the world wide stock exchange. Even daily news of sudden crises and wars around the world can change the behavior of investors massively. On the other side, political decisions, that are announced for a long time, like sanctions, subsidies and punitive tariffs, can lead to unexpected courses on the stock exchange, too. Investors and traders around the world have to handle these sudden movements carefully to not lose a lot of money, or better, to make profit. But different events have different results. And depending on where the traders are in the market, they behave different.