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Analysts Are Now Offering Their Take On France's Election

Analysts Are Now Offering Their Take On France's Election

The first round of France's national election is over to the delight of investors. Centrist Emmanuel Macron and far-right nationalist Marine Le Pen will move on to the second round of voting in early May.

Here is a summary of what analysts are saying about the election results and the surge in global equities that followed suit, according to a Bloomberg report.

Citigroup: 'Risk-On'

Citigroup's Jonathan Stubbs is bullish on the European banking sector, which stands to benefit from the lower political risk. Specifically, France-based banks could outperform by around 10 percent in the near-term but overall international investors, especially Americans, will return to European equities.

Goldman Sachs: What Political Risk?

Goldman Sachs' equity strategist Peter Oppenheimer noted that the ongoing political concerns of the election haven't held back European and France-listed stocks since the start of the year.

Nevertheless, the election results thus far do generate some relief for French and Italian banks. But at the end of the day, France's stock market hasn't significantly under-performed as of late so investors shouldn't expect a large rally to follow.

BlackRock: Positive Surprise

BlackRock's Richard Turnill believes the pro-European and business-friendly candidate Macron has plenty of momentum moving forward. This momentum will create an environment of reduced political risk in Europe.

Turnill did, however, add that Italy will become the next country of focus in terms of European political risk.

Makor Capital: Forget About Frexit

Makor Capital Markets' Stephan Barbier expects Macron to win the election by a large margin which dispels any "Frexit" concerns.

El-Erian: Not All Risk Is Moved

Mohamed El-Erian, Allianz chief economic advisor and former PIMCO CEO was a guest on CNBC's "Halftime Report" segment to discuss the results. His main concern is that much of the uncertainty and risks from the election are not fully lifted.

El-Erian questioned the logic behind Monday's rally since the outcome of the first round of voting is in-line with what was the "highest expected outcome" predicted by not only investors but polls in France. However, part of the rally could be attributed to the fact that the far-left candidate Jean-Luc Mélenchon didn't advance to the second round, which would have pitted him against the far-right candidate Le Pen.

Meanwhile, the results of the first round of the election doesn't remove anti-establishment concerns as Le Pen is seen as anti-establishment candidate that may want to break up with the European Union.

El-Erian further stated that if Macron wins the election then France's status as a possible source of systemic shock to the global markets will be removed.

Related Links:

French Connection: What An Election Means For ETFs

Citi Sounds The Alarm Over Owning French Bank Stocks
Image Credit: By Antoine Bayet -, CC BY-SA 2.0, via Wikimedia Commons

Posted-In: Analyst Color News Politics Events Global Analyst Ratings Media General Best of Benzinga


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