Extensive research has shown that both right- and left-wing populists lead to lower stock returns and higher inflation. Business leaders are quick to abhor left-wing populism, with its government giveaways to supporters, spending on boondoggle projects, and disregard for financial discipline and investor confidence. They’re more likely to see right-wing populists as the “safe” variety, and can be conflicted about whether and how to oppose them.
But new research shows that right-wing populism negatively affects stock returns — and the problem gets worse the longer populist leaders are in power. Executives need to take these risks seriously and learn how the rise of right-wing populists affects credit and currency stability, talent acquisition and retention, investor confidence and asset flows — and the very ability to run and grow a business. The text also includes a case study of a Hungarian business owner who is facing pressure from the government of Prime Minister Viktor Orbán.