Faced with the uncertainty caused by the surprise dissolution of the National Assembly, we questioned ten French and European equity managers on the foreseeable evolution of the Cac 40, their trade-offs and their favorite stocks.
In the vast majority of cases, these experts anticipate a low point of the CAC 40 around 7,300 points, which constitutes a support for the index. Indeed, a victory of the National Rally should have limited consequences, because this party has watered down its spendthrift economic program, and the room for maneuver is very limited due to France’s high debt. As Louis Puga explains, “businesses will not be impacted from an economic point of view”.
The scenario of only a relative majority of the National Rally would rather be good news for the Stock Exchange, which could rise to 7,700 or 7,800 points, as Stéphane Furet anticipates, provided however that a government can be appointed. Two other factors will support the rating: Cac 40 companies only carry out a small part of their activity in France, and the economic context should be better in the second half of the year than in the first. In any case, according to most managers, the evolution of the remuneration differential between the French and German rates will be the determining factor.
Ultimately, only one scenario would result in a collapse of the markets, with a Cac 40 which could even return to 6,000 points: the victory of the New Popular Front, with its excessively expensive economic program and source of soaring interest rates.
Regarding the arbitrages made since the announcement of the dissolution, several managers sold stocks that had held up well to buy quality stocks that had been excessively attacked. In this regard, Spie was acclaimed, with a purchase by three managers. While some of them increased their cash (Marc Favard and William Higgons), others, on the contrary, invested them (Eric Bleines and Edwin Faure). Among their three favorite stocks, only one is mentioned twice: Fountaine Pajot. By sector, defense and industrial stocks focused on electrification are recommended.
