As Europe prepares for the outcome of Italy's highly consequential election on March 4, emerging markets investors are keeping tabs on political movements further afield ahead of elections in several developing economies this year.
One top investment bank has laid out the big ones to watch: Russia, Mexico, Colombia, Hungary, Malaysia and Brazil. These elections "have the potential to move markets," according to UBS' Chief Investment Office, which published the list this week in its EM Electoral Monitor.
Ranging from the politically opaque — like Russia's election, which has been widely criticized for being undemocratic — to more free and fair, the bank presented its base cases for the contests' outcomes and how they might impact those country's assets.
CNBC takes a look at the assessments of Russia, Mexico and Hungary.
Russia
Western governments and transparency organizations alike heavily dispute the legitimacy of Russia's upcoming election on March 18. Many question whether it should be called an election at all — the most viable opposition candidates have been barred from running, dissent is often met with force and the press is heavily state-monitored.
The incumbent Vladimir Putin, having already served as president of the Russian Federation for 12 years in two separate terms and prime minister for eight year in between, has a virtually certain victory ahead of him. UBS reports his contenders poll at a combined total of 16 percent of the vote.
Continuation of the status quo is the most likely outcome investors can rely on, with shifts in the Russian economy more likely to be influenced by global energy prices and economic sanctions than any upcoming elections.
Russia's GDP growth, which saw mild recovery in 2017 after a two-year recession, is expected to improve at a modest rate. Still, its growth potential remains low due to structural issues, low oil prices and Western sanctions. Any chance of meaningful structural reforms, UBS believes, will rather come if reformist politicians are appointed to the role of prime minister or to the cabinet.
Mexico
July 1 will see both presidential and legislative elections in Mexico. While the outcome is still largely a toss-up, UBS predicts Andres Manuel Lopez Obrador, or AMLO, from the leftwing Morena party as the most likely winner.
This could move markets as the former Mexico City mayor plans to champion a turn against neoliberal economics and pursue greater state involvement in the economy.
AMLO's left-leaning agenda would aim to end the privatization of Mexican state oil company Pemex and the country's electricity industry, bringing "changes to the status quo and unorthodox macro policies" that would "likely weigh on Mexican assets," UBS said.
Meanwhile, victories for either of the two other contenders — Mexico's center-right PRI (Institutional Revolutionary Party) and PAN (National Action Party) — would be more reassuring to investors. Either would imply continuity of the current macro policy, thereby entailing "smoother sailing for the Mexican economy and asset prices," the UBS investment office said.
The bank expects Mexico to "exhibit resilience to shocks" and carry on with strong exports to offset lower oil output.
Hungary
The central European manufacturing hub is set to vote in parliamentary elections on April 8, and analysts have slated the right-wing party of firebrand incumbent leader Viktor Orban to win easily.
This would cement the status quo, and investors so far don't expect asset prices to change. The country of 10 million enjoys a current account surplus and positive foreign investment flows.
Orban's Fidesz Party has since 2010 pursued a nationalist-populist agenda that pushes hard against immigration and Islam, and is at frequent loggerheads with the EU.
Labeled by some as the "troublemaker of Europe", Orban has drawn criticism from international observers who say he's weakened the country's democratic institutions.
Still, a Fidesz victory would ensure continuity for investors. UBS predicts no major changes to the government's policies, likely continuation of low budget deficit and "a further reduction of external vulnerabilities, but also likely continued differences with EU partners."
In a surprising development, Orban's party lost a local by-election over the weekend in a small town whose votes are said to be the bellwether for future political outcomes. While less likely, an alternative victory by a coalition of opposition parties could still happen, creating uncertainty that would weigh on investor sentiment toward Hungarian assets, UBS said.
Politics versus markets
While just a few of the many big elections scheduled for the coming months, these results could have significant repercussions if new governments pursue significantly different agendas than their predecessors. After all, uncertainty is the biggest worry for most investors.
But 2017, full of political surprises, showed that markets are surprisingly resilient to politics. UBS advised investors to keep in mind that "what ultimately drives markets are expected changes in economic and corporate fundamentals."
Other major contests to watch out for will be taking place in Colombia, Malaysia, Brazil, Egypt, Afghanistan and Iraq, among others, although the fairness and legitimacy of some are bound to be disputed due to lack of transparency and weakness of democratic institutions.