The French presidential campaign concluded with the victory of En Marche’s candidate Emmanuel Macron. Nevertheless the newly elected president has often been depicted as the “the banker” or “the candidate of globalised finance”, those nicknames referring to his past career at Rothschild & Cie.
Also finance generally speaking has not been spared during the campaign. InvestmentEurope has asked his view on the matter to Laurent Millet, co-portfolio manager of the Artemis European Opportunities Fund with Mark Page.
What is your view on the fact that over 40% of French voters in the first round of the election have voted for candidates (Le Pen, Mélenchon) who have blamed the financial industry for the poor economic situation in France and outside the country during their campaign?
While it is true that Mr Mélenchon is blaming the financial industry for the poor economic situation in France, this is much less clear from Mrs Le Pen. She is painting Mr Macron as the ‘candidate of globalised finance’ and tried to picture herself as the candidate of the people but her program did not mention any new taxes / regulations on banks. What is of course worrying is that 40% of the people who voted (the turnout was 77%) chose to back a populist and protectionist candidate.
Do you feel like those who have voted for these Le Pen or Mélenchon support their view on finance?
In the case of Mr Mélenchon, there is little doubt that people were attracted to his positions as the ‘enemy of finance’. But to put it into context, the ‘left of the left’ has usually represented around 15% of the votes in the French presidential election. This time, Mr Mélenchon benefitted from a very weak score from the other far left candidates and from the near-collapse of the socialist party, divided between Mr Hamon and Mr Macron. Those voting for Mrs Le Pen have done it either to protest against what they perceive is excessive immigration, the current economic situation (especially in the North and East of France) and / or because they are in favour of leaving the euro. But very few, if any, voted for Mrs Le Pen because of her supposed opposition to finance.
What does this mean for the financial sector?
There are many reasons to be negative on the financial sector in France, but the presidential election is not one of them. Mr Macron, is market-friendly while Mrs Le Pen does not strongly oppose the financial sector per se. But the most important elections will be the following ones, in June when 577 MPs will be elected. These elections are usually very difficult for the populist parties and it is unlikely Mrs Le Pen would get more than 50 MPs in total. The most likely result would be a victory either of the center-right or of Mr Macron’s party with left-wing parties losing ground.
The Artemis European Opportunities Fund does not own any bank as the sector is very competitive, margins relatively low and population ageing means that loan growth will be tough to achieve. 3% of the fund’s assets are in the French asset manager Amundi. It has a very low cost / income ratio, they would be major beneficiaries of any shift from fixed income to equity products in France and the Pioneer acquisition was both wise and very attractively priced. But this is a stock picking call, not a call on the result of the French presidential election.