In the ‘slightly’ grey areas where the interests of politics and finance intersect, there is always a third player lurking: lobbies. Representing a wide range of industries and sectors, these lobbies are as discreet as they are influential, exerting considerable influence on political decisions that have a direct impact on growth and financial markets.

A practice as old as time

Power plays have existed since the dawn of time. History is full of examples. In the 19^th century, the passage of the Pacific Railway Acts provided for major government subsidies and land concessions, including aboriginal territories. These were advantages obtained by the railway industry through active lobbying. The aim: to encourage the US government to provide massive support for the construction of rail transport infrastructure in the country. Even more eloquent are the efforts of the tobacco industry which, despite scientific evidence establishing a clear link between tobacco consumption and health problems, has long lobbied to maintain lax regulations concerning them and to maintain a certain level of profitability.

Influence groups and global trade

Pressure groups exert their influence not only at national level, but also in international trade. The recent frictions surrounding trade relations between the United States, Europe and China bear witness to this. Remember! In 2018, Donald Trump’s United States launched an all-out trade war against China, imposing extraordinary tariffs on the country’s exports. The arguments put forward related to the protection of intellectual property, trade practices deemed unfair and the trade deficit between the two countries. . In addition to the policy of the Trump administration

this decision was also driven by the interests of various American industrial groups, particularly those in the manufacturing sector, who felt directly threatened by Chinese competition.

This Sino-American trade dispute has obviously had repercussions in Europe. Although European companies were not directly involved in this policy, they felt the full force of it because of the interdependence of their supply chains with China and the United States. To defend themselves, they have in turn undertaken lobbying efforts. In particular, the powerful car manufacturers and the financial sector. Their ambition was simple: to urge their respective governments and the European Union to find a more conciliatory diplomatic solution to mitigate the consequences of this bitter war.

In this global battle, lobbies on both sides of the Atlantic have sought to influence the dynamics of trade relations between the United States, Europe and China. Their efforts, whether in support of protectionist measures or in favour of more open markets, have shown just how complex are the networks of economic interactions and negotiations between these major powers. It also highlighted the central role that lobbying can play in shaping trade policy and international relations.

Impact on markets and corporate health

Even if they are not always successful, lobbying efforts have a tangible impact on share prices, exchange rates and investment decisions. Regulatory changes can also trigger significant volatility, prompting investors to quickly adjust their strategies and portfolios. The financial health of companies can also be affected by changes in tax policies, the implementation of trade agreements or the granting of certain subsidies.

In this way, lobbying efforts shape policies, regulations and the financial environment, often with significant consequences for the markets. At a time when lobbies are a formidable force, investors need to recognise that their portfolios are not only subject to market fluctuations, but also to various influences and their political and legislative translation.

This is why it is vital for managers and investors alike to question lobbying activities and their potential impact on the various investment sectors. Knowing how to gauge the economic fundamentals, as well as the trends that can influence a stock, a share price or results, is vital if you want to do well.

Although we know that lobbyists often operate behind the scenes – to avoid controversy, establish relationships of trust or increase their chances of success – a critical mind and a good understanding of the issues will give you a complementary angle of analysis. The spin-off of Sandoz by Novartis is a perfect illustration of the situation: even if the fundamentals encourage investment, the success of the company will depend on medical prescriptions, with the income of doctors paid by the big pharmaceutical groups at stake. Reducing healthcare costs versus the variability of healthcare professionals’ incomes – it’s a subject worth thinking about!