Political factors generally refer to those international political activities, major economic policy development plans, government decrees and political measures that have a certain influence on stock prices. Changes in the political situation have also had an increasingly sensitive impact on stock prices. Its main manifestations are:
1. Changes in the international situation. For example, the improvement of diplomatic relations will increase the share prices of relevant multinational companies. Investors should lose no time in buying stocks of relevant multinational companies when diplomatic relations improve.
2. The influence of war. The war has caused political and economic instability invarious countries, turmoil in people's hearts, and decline in stock prices. This is the widespread impact of the war. But the war has different effects on the stock prices of different industries. For example, if the war makes the munitions industry flourish, the stock prices of all companies related to the munitions industry will inevitably rise. Therefore, investors should purchase stocks in military supplies and related industries at an appropriate time and sell stocks in industries that are vulnerable to war.
3. Major domestic political events, such as political turmoil, will also affect stocks. First, it has an impact on the psychology of stock investors, thereby indirectly affecting stock prices.
4. Major economic policies of the country, such as industrial policies, taxation policies, and monetary policies, have a major impact on stock prices. The stock price of industries that the state supports and develops will be pushed up; while the stock prices of industries that are compulsorily developed by the state will be adversely affected. For example, the state imposes price restrictions on the products and services of public utilities, including transportation and gas. This will directly affect the profitability of public utilities and cause the stock price of public utility companies to fall; changes in monetary policy will cause changes in market interest rates, which will lead to changes in stock prices; tax policies can enjoy national tax reductions and exemptions. The stock price of a preferential joint-stock company will show an upward trend, and an increase in personal income tax will cause a decline in social consumption levels and cause slow sales of goods, which will affect the company's production scale, resulting in a decline in profitability and a decline in stock prices. These policy factors have an impact on the stock market itself, that is, through the company's profitability and market interest rates, it has a certain impact, and then causes changes in stock prices.