The new left-wing alliance, the New People’s Front, announces plans to back tax increases to finance more government spending.
Support for the National Rally has surged among French businesses after the new left-wing alliance, the New Popular Front (NPF), said it favored higher taxes for businesses.
France’s economy has been disrupted by President Emmanuel Macron ahead of snap elections on June 30 and July 7.
France’s four main left-wing parties, the Socialists, the Greens, France Insoumise and the Communists, merged on June 10 to form the NPF.
The NPF said it was considering a tax and spend policy that, if elected, would not bode well for business.
Such a policy means raising the tax burden on business to raise more money to finance increased government spending.
Meanwhile, Marine Le Pen’s National Rally (NR) party has promised significant tax cuts, strengthened anti-immigration policies and a lower retirement age among its proposals “to get more support from the working class”. .
Referring to the National Rally party, the leading company in the CAC 40, one of the benchmarks of the French stock market, the Financial Times was quoted as saying: “The economic policies of the RN are a blank slate that companies think they can contribute to take . the right way. The hard left it is impossible to dilute the anti-capitalist agenda.
The CAC 40 index has decreased by 7.05% over the past month.
Investors may be on their knees when it comes to French stocks
Surprisingly, only about 20% of the CAC 40 index is exposed to French markets, which may make it difficult to understand the sudden burst of sales.
Speaking about the CAC 40 as reported by CNBC, Sharon Bell, chief equity strategist at Goldman Sachs, said: “It doesn’t represent zero French exposure, and people are obviously adding an additional risk premium to France at the moment because of the upcoming elections.
“It’s a market that has performed well in recent years, with some companies being quite well valued. I think it was a bit of a knee-jerk reaction to sell all French stocks, and we would say the most vulnerable are small caps and French national stocks. »
For US and Asian investors, heightened political risk in Europe remains a key factor when it comes to investing in France and the rest of Europe. As a result, the investment gap between the US and Europe is expected to remain in the coming years.