​The influence of political factors on stock prices

Politicalfactors generally refer to those international political activities, majoreconomic policy development plans, government decrees and political measuresthat have a certain influence on stock prices. Changes in the politicalsituation have also had an increasingly sensitive impact on stock prices. Itsmain manifestations are:

①Changes inthe international situation. For example, the improvement of diplomaticrelations will increase the share prices of relevant multinational companies.Investors should lose no time in buying stocks of relevant multinationalcompanies when diplomatic relations improve

②Theinfluence 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 onthe stock prices of different industries. For example, if the war makes themunitions industry flourish, the stock prices of all companies related to themunitions industry will inevitably rise. Therefore, investors should purchasestocks in military supplies and related industries at an appropriate time andsell stocks in industries that are vulnerable to war.

③Majordomestic political events, such as political turmoil, will also affect stocks.First, it has an impact on the psychology of stock investors, therebyindirectly affecting stock prices.

④Majoreconomic policies of the country, such as industrial policies, taxationpolicies, and monetary policies, have a major impact on stock prices. The stockprice of industries that the state supports and develops will be pushed up;while the stock prices of industries that are compulsorily developed by thestate will be adversely affected. For example, the state imposes pricerestrictions on the products and services of public utilities, includingtransportation and gas. This will directly affect the profitability of publicutilities and cause the stock price of public utility companies to fall;changes in monetary policy will cause changes in market interest rates, whichwill lead to changes in stock prices; tax policies can enjoy national tax reductionsand exemptions The stock price of a preferential joint-stock company will showan upward trend, and an increase in personal income tax will cause a decline insocial consumption levels and cause slow sales of goods, which will affect thecompany's production scale, resulting in a decline in profitability and adecline in stock prices. These policy factors have an impact on the stockmarket itself, that is, through the company's profitability and market interestrates, it has a certain impact, and then causes changes in stock prices.