Angela Merkel secured her fourth consecutive term as German Chancellor on Sunday, although the victory was bittersweet after a far-right populist party earned more seats than expected.
Merkel’s centre-right CDU/CSU party won a projected 33% of the popular vote, making it the biggest party in the Bundestag with an estimated 218 seats. The Social Democrats (SPD) led by Martin Schulz finished a distant second with just over 20% and a projected 138 seats.
Alternative for Germany (AfD), Germany’s version of right-wing populism, surged in the rankings, taking 13.5% of the vote and a projected 87 seats. With the gain, AfD becomes the first nationalist party to sit in parliament in 60 years. The strong showing also marks a radical shift in Germany’s postwar politics.
Making up the balance of parliament are market-friendly FDP, left-leaning Die Linke and the Greens. Other parties also took roughly 5% of the popular vote, exit polls showed. These figures are subject to change as the final ballot results trickle in.
Regardless of the final count, Merkel’s CDU/CSU clearly doesn’t have the seats to govern alone, making a coalition government all but a given. However, Schulz confirmed on Sunday that his party will not renew its “grand coalition” with Merkel, but instead head the opposition.
The unlikely alliance between CDU/USD and SPD governed the previous parliamentary cycle after Merkel’s allies failed to secure seats during the 2013 election.
Germany has been the centre of attention for many weeks, as investors speculated about which parties Merkel will choose to sit alongside her in parliament. With SPD out, FDR and others will likely step up to join the coalition. Merkel has already signaled her intent to “win back” AfD voters.
As Europe’s largest economy, Germany holds significant sway in Brussels and is practically the de facto head of the 19-member Eurozone. With Merkel at the helm, it’s likely to be business as usual for Berlin, although this will depend on her coalition partners.
The AfD has made it abundantly clear that it would like to exit the European Union and close Germany’s borders to the influx of migrants that have washed ashore from the Middle East and Africa.
The financial markets will be on high alert this week for new about the formation of a new coalition government.
 Jon Henley (24 September 2017). “German elections 2017: Angela Merkel wins fourth term but AfD makes gains – as it happened.” The Guardian.
 Fred Pleitgen and James Masters (24 September 2017). “Merkel gets a fourth term but German voters deliver far-right surge.” CNN.
 Sam Bourgi (19 September 2017). “The Best Dividend Stocks to Play the German Elections.” Dividend.com.