India and Indonesia stocks have potential downside due to uncertainty ahead of their national elections next year, Societe Generale SA strategists wrote, downgrading equities for both markets.

The elections are coming when India is weathering a “moderating” economic outlook, strategists including Frank Benzimra and Rajat Agarwal wrote in a Nov. 29 note, expecting a pause in their outperformance. The European bank slashed India to neutral from overweight, while downgrading Indonesia to underweight on weak earnings outlook and political uncertainty.

SocGen’s allocation changes point to the risks that many markets face as they head into 2024’s packed election calendar. Starting with Taiwan in January and running through the US presidential election in November, the year will bring 40 national elections. Combined with an uncertain outlook for the Federal Reserve’s rate decisions, the polls risk adding volatility to global financial markets.

Indonesians will head to the polls in February, while India’s general election is expected sometime in April and May.

READ: Stocks Set to be Rocked by Looming 2024 Election Calendar

India’s S&P BSE Sensex equity benchmark index has risen 15% since Benzimra’s team upgraded India stocks in September 2022, compared to an advance of 8.8% in the MSCI Emerging Markets Index. The South Asian market has been a top pick for many asset managers this year, attracting foreign inflows.

While the current situation in India looks almost as optimistic as it did preceding the 2019 election, a loss by Prime Minister Narendra Modi’s party could result in a 2004 scenario, when the market quickly corrected itself by more than 15% before recovering, according to SocGen analysts.

For Taiwanese equities the strategists upgraded their view to overweight from neutral, citing “accelerated demand for high performance AI chips and signs of a technology demand revival in China” in the second half.