The Dutch elections yesterday – seen as a test for populism in Europe ahead of French and German polls – managed to produce a “non-market moving” result, it was said this morning as asset managers digested the outcome.
With an 81% voter turnout, Sylvain De Bus, head of euro bonds at Candriam, said the election was an “important test for populism in Europe” this year after last year’s Brexit outcome and Donald Trump’s election.
The ruling VVD party came first with 33 seats in the 150-seat lower house of parliament, while the running was close between Geert Wilders’ Eurosceptic PVV, the pro-European D66 party, and the centre-right conservative Christian Democrats.
The result meant the vast majority of Dutch voters opted for pro-European mainstream parties, said De Bus.
However, at least four parties will be necessary to form a government and De Bus said Candriam expected a centre-right coalition to be formed with Mark Rutte, leader of the ruling VVD party, as premier.
“The [eurosceptic] PVV will not be part of the next government given the refusal of most political parties to share power with this party,” De Bus said.
Michael Metcalfe, global head of macro strategy at State Street Global Markets, said the victory of the VVD was in line with the most recent polling.
“As is often the case, the popularity of the more radical Party for Freedom [PVV] slipped as the election approached. This highlights polls do not always or systematically underestimate the populist vote as arguably they did in the case of Brexit or Trump.”
As for the reaction in investment markets, investors are said to have been relieved by the outcome, and there may be a buying opportunity.
Darren Ruane, head of fixed income at Investec Wealth & Investment, said: “The results of the Dutch election helped to buoy investment markets following a better-than-expected outcome for mainstream parties.”
State Street’s Metcalfe said: “While a potential market moving result has been avoided, there had been few signs of disruption in Dutch financial assets prior to the vote, which suggests any relief rally will be equally modest.”
Roelof Salomans, chief strategist and head of allocation at Kempen Capital Management, said: “Populism’s advance has been halted for the time being. Part of the cloud of uncertainty is being lifted. Next month’s French presidential elections pose a fresh test.
“However, if that leads again to a ‘panic peak’ then this presents a good time to buy in our opinion, as we believe that this year of European elections will fizzle out without a bang.”
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