The German Election and possible trading opportunities

On September 24 this year, German citizens will head to the polls to elect the nation’s Bundestag, or lower house. Incumbent Angela Merkel of the Christian Democratic Union of Germany (CDU) is running for fourth time, this year against Martin Schulz of the Social Democratic Party. But there is also another player in the electoral race, the populist Alternative for Germany (AfD), which has entered Berlin’s state parliament, and now holds seats in 10 out of Germany’s 16 regional assembles.

How does the Election work?

Germany’s voting system combines elements of both direct and proportional representation. The ballot contains two votes: one for a candidate and one for a party. In the first vote, voters will choose their favourite candidate to represent their district in the parliament and in the second vote, they vote for a political party. Interestingly, voters can split their vote amongst parties. For example, one may cast their ballot for their local Christian Democrat candidate in the first vote and vote for the Green party in the second vote.

Possible Scenarios

Undoubtedly, the key themes of this year’s elections are national security and immigration policy. Merkel has often been criticised by nationalist groups for her liberal approach to immigration. Populist candidates, including the far-right Alternative for Germany are expected to gain ground in the election and any signs of Merkel losing power may cause a market backlash and may also severely hit the Euro, European stocks and other assets with exposure to the European market. A Merkel loss could open the door to the rise of a new, Eurosceptic government and exacerbate the already tense relationship with Trump – especially if Schulz wins.

If one thing is certain, is that the German populist movement is rising in the wake of migrant crisis, and can pull votes from mainstream parties including the CDU and the SPD. All in all, the German election race is currently in ‘flux’ and the results remain mired in uncertainty. The German election marks the conclusion of a historic and market-moving electoral cycle in Europe.

Trade the German Election

Get ready to take advantage of the trading opportunities arising from another market-shaking event and benefit from Tickmill’s competitive trading conditions.

• Typical spread on EUR/USD 0.2 pips
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• 15+ CFDs on stock indices

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Losses can exceed the initial deposit.

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