The uncertain investment environment is closely coupled with the uncertain political environment. Investors require certainty, and how does one have confidence in a rapidly changing political environment? It is obviously difficult to anticipate the toppling of dictators and revolutions such as we have seen in the Middle East and North Africa, but we can anticipate the timing of elections in democratic countries (shown in the chart above).

Social tensions and political change are at perhaps their highest level in decades, reflecting high levels of unemployment, government austerity programs, high food prices, the advent of social media and globalised access to the internet, the end of communist regimes in Eastern Europe and elsewhere, and of course many other factors. In Europe alone, we’ve already seen changes in government in Spain, Greece and Italy just in the last couple of months, with the French Presidential elections due in April.

The most important election from the media point of view will of course be the US Presidential election, which looks to be a race between Barack Obama and Mitt Romney. But there are many other political changes afoot, not least the leadership transition expected in China in October this year.

How will all these elections affect policy? As elections approach, the political rhetoric tends to heat up. In an environment of currency and trade disputes, increased protectionism and uncertainty around trading blocks, the political uncertainty adds one more dimension to investor unease.