{"id":62852,"date":"2017-05-09T01:32:01","date_gmt":"2017-05-08T23:32:01","guid":{"rendered":"http:\/\/beta.next-finance.net\/opinion\/france-election-macron-wins-big\/"},"modified":"2017-05-09T01:32:01","modified_gmt":"2017-05-08T23:32:01","slug":"france-election-macron-wins-big","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/opinion\/france-election-macron-wins-big\/","title":{"rendered":"France election: Macron wins big"},"content":{"rendered":"<p>Independent centrist Emmanuel Macron has prevailed over the far-right Marine Le<br \/>\nPen in the final round of the French presidential election. Macron\u2019s comfortable win of<br \/>\nabout 65% of the vote marked a rebuke of Le Pen\u2019s <em>Front National<\/em> party, which ran on<br \/>\na nationalistic platform that included a referendum on leaving the European Union.<\/p>\n<p>We expect the focus to shift to French legislative elections in June. These will be<br \/>\ncrucial for determining Macron\u2019s ability to implement his economic program, which<br \/>\nincludes labor market reforms that would make it easier for French businesses to hire<br \/>\nand fire. We see scope for a mild risk-on reaction to the result, which looks mostly<br \/>\npriced in after Macron clocked a first-round victory and polls consistently showed him<br \/>\nahead by a large margin.<\/p>\n<p>We are positive on European shares and see potential for renewed investor inflows as<br \/>\nfocus returns to the region\u2019s improving growth. European purchasing managers\u2019<br \/>\nindexes point to the strongest economic activity in six years. Europe stands to benefit<br \/>\nfrom global reflation, and we see attractive valuations in cyclical shares. We are<br \/>\nunderweight European fixed income. The region\u2019s improving economic outlook may<br \/>\nspur higher bond yields and wider credit spreads \u2013 especially if markets sense the<br \/>\nEuropean Central Bank (ECB) is moving toward winding back its asset purchases.<\/p>\n<p>Macron will form an interim government for the short period until the new National<br \/>\nAssembly is in place in July. This government is not expected to make significant<br \/>\npolicy decisions, but appointments will be a gauge of Macron\u2019s ability to attract highprofile<br \/>\nnames from the two major parties to form a broad-based majority.<\/p>\n<p>Our base case is that Macron will need to select a compromise prime minister and<br \/>\ncobble together a working majority with supportive members of France\u2019s two major<br \/>\nparties. This could lead to some watering down of his reform plans. Yet Macron\u2019s<br \/>\ncomfortable win means we now see some chance his <em>En Marche<\/em>! movement and its<br \/>\nformal allies could win an outright majority, enabling him to choose his prime minister<br \/>\nand government. A lower-probability scenario we see is the <em>Les R\u00e9publicains<\/em> conservative party winning a majority. The last two scenarios would allow for business-friendly reforms \u2013 and would be welcomed by markets, we believe.  <\/p>\n<p>The French election result confirms our view that markets until recently had<br \/>\noverstated European political risks. Italian political risk and the country\u2019s fragile<br \/>\nbanking system could move back into focus soon, however, particularly if the<br \/>\nlikelihood of early elections in late 2017 rises. These issues as well as Europe\u2019s still<br \/>\nincomplete banking and fiscal union leave fault lines that could be exposed by<br \/>\neventual ECB normalization \u2013 and which bring into question the longer-term<br \/>\nsustainability of the European Monetary Union.<\/p>\n<p>Macron\u2019s win marks a sea change in French politics. He is not part of the mainstream<br \/>\nleft\/right parties that have dominated since Charles de Gaulle formed the Fifth<br \/>\nRepublic nearly 60 years ago. Macron, a 39-year-old former investment banker, ran<br \/>\non a \u201cchange\u201d platform that would favor business-friendly reforms and deeper<br \/>\nEuropean integration. He is committed to meeting the EU\u2019s 3% deficit target,<br \/>\ncombining spending cuts with targeted investments and freeing up the labor market. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>The French election result confirms our view that markets until recently had<br \/>\noverstated European political risks. Italian political risk and the country\u2019s fragile<br \/>\nbanking system could move back into focus soon, however, particularly if the<br \/>\nlikelihood of early elections in late 2017 rises.<\/p>\n","protected":false},"author":1,"featured_media":62850,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1480],"tags":[1655,2073,1854,1651,2087,2068],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/62852"}],"collection":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/comments?post=62852"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/62852\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/62850"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=62852"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=62852"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=62852"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}