Shares of Asian companies such as India's Tata Power Co and Indonesia's PT Gudang Garam may extend gains as the region's governments take steps to retain office in as many as eight national elections this year.
"The elections in Asia are good news for equity markets," said William Pitman, who helps manage about US$3 billion of assets at Henderson Global Investors in Singapore. Stocks will benefit from incumbents' "pump-priming," such as increased spending and lower taxes, he said.
Indian stocks such as Tata Power, the country's largest investor-owned utility, rose after Prime Minister Atal Bihari Vajpayee announced cuts in import and excise taxes this month. Shares of the company have climbed 28 percent after almost tripling last year.
Gudang Garam, Indonesia's largest cigarette maker, has risen 17 percent this month. The country's government refrained from raising the excise tax on cigarettes before elections this year.
Both stocks outpaced the 3 percent gain in Morgan Stanley Capital International's Asia-Pacific Index, a benchmark for the region. Other election-related shares, including Taiwan's First Financial Holding Co (
In March Taiwan will kick off this year's voting with a presidential election. Indonesia elects a new parliament in April and holds a first round of presidential elections three months later. South Korea holds legislative elections in April.
The Philippines' national election, featuring a vote for president, occurs on May 10. Japanese voters choose members of parliament's upper house on July 11.
India's parliamentary elections will be held as soon as April. Similar votes will take place in Australia as early as August, in Malaysia by November, and in Hong Kong at year-end.
Experience shows the effect that a change in government can have on stock performance in Asia.
The policies of Thaksin Shinawatra, Thailand's Prime Minister since January 2001, have helped boost the country's economy. The Asian Development Bank has forecast 6.3 percent growth this year, the fastest since 1996. The benchmark SET Index has surged threefold during his tenure.
By contrast, the Philippine Stock Exchange Composite index has risen only 4 percent since President Gloria Arroyo came to power that month. Since July, the defense secretary, military intelligence chief and finance secretary have resigned. The latter claimed the country is in a financial crisis.
State Bank of India has gained 18 percent this year for the second-biggest advance in the Sensex index. Only Tata Power has risen more.
Companies such as Larsen & Toubro Ltd, the country's largest engineering company, are benefiting as India steps up spending for infrastructure. The country plans outlays of 540 billion rupees through 2007 on roads.