Media Release | Apr. 18, 2005

UBC Election Stock Market Shows Early Lead for Liberals; Close Pass / Fail for Referendum

With the British Columbia provincial election a mere four weeks away, prices on the UBC Election Stock market (UBC ESM) are indicating a second majority government for the BC Liberal party. In contrast, trading on the referendum on electoral reform shows voters are almost equally divided on whether the referendum will pass or fail.

Operated during various Canadian federal and B.C. provincial elections since 1993, the UBC ESM is an online, real-time market where the “shares” (or contracts) being traded are based on the outcome of an election. Past UBC ESMs have accurately predicted the outcome, within a few seats held, of the 2001 B.C. provincial election and 1997 and 2000 federal elections.

“To this point the market has quite consistently been predicting a Liberal majority government, now predicted at about 60 per cent of the seats,” says Prof. Tom Ross, director of the Phelps Centre for the Study of Government and Business and co-director of the UBC ESM. “With respect to the likelihood the referendum will pass, the market has moved much more, from a very pessimistic outlook early to the current situation in which the market gives the referendum a 47% chance of passing.”

“The number of investors and total investment in the market has been growing and, with the parties moving into election mode and the media becoming more focused on the election, we expect to see much higher trading volumes in the near future.”

Participants in the stock market invest their own funds to buy and sell financial contracts representing the political parties, and in addition, bear the risk of losing money as well as earning profits. Four markets are currently operating for the B.C. provincial election: a “seats market,” a “popular vote market,” a “majority government market,” and an “electoral reform referendum market.”

The UBC ESM operates on a not-for-profit basis, with the results of the market contributing to research and teaching at UBC on market and trader behaviour. The minimum deposit required to open an account is $25, and the maximum amount that may be invested is $1,000 per account. At the close of the market, participants’ portfolios are repurchased by the UBC ESM at prices determined by the election results. Individual traders will earn profits or bear losses depending upon whether the final values of their portfolios exceed or are lower than their initial investments.

To open an account, or to watch the results, visit http://esm.ubc.ca.

About the Sauder School of Business at UBC

The Sauder School of Business at the University of British Columbia is Canada’s leading academic business school. Recognized globally for its contributions to management practice through its innovative research and teaching, the school is dedicated to opening worlds of opportunities for its students, alumni and associated communities.

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Contact

Lisa Miguez
Public Relations Manager
Sauder School of Business
Tel: 604.822.8345
E-mail: miguez@sauder.ubc.ca