Amundi: Markets complacent for Macron victory, but game is not yet won

Amundi: Markets complacent for Macron victory, but game is not yet won

April 13, 2022

Politics France
Frankrijk

Vincent Mortier, Group Chief Investment Officer at Amundi Asset Management, weighs in on the first round of the French presidential elections and discusses the final round and what this means for investors.

Early polls are projecting a Macron victory but only marginally at 51-54.5% of votes in the second round. The outcome will be determined by the TV debate on 20 April and on the two candidates’ ability to poach votes from those who were knocked out in the first round. Pundits estimate a Le Pen victory at 30%, which is not negligible and is likely to trigger some volatility in the coming weeks.

The election has caused very little reaction on markets so far, as the result was already largely priced in. The Eurozone economy is still in worse shape compared to the US, but this is not due to the election, as much as the ongoing conflict in Ukraine. Le Pen’s stance on international and foreign affairs represents another risk factor for investors in this regard.

We remain cautious about European equities, favouring high-quality US names and the value sector. Now is not the time to add more risk to portfolios, but to play rotations within markets and to implement some short-term hedging against volatility. Markets seem complacent about a Macron victory, even though the probability of a non-market friendly victory by Le Pen is not negligible, and hedges should be considered. We remain cautious on the Euro. Ultimately the first-round result should also be seen as a potential risk for peripheral debt.

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