French Stock ETFs See Love From Investors Pricing Out Populism

Utermann Says ‘All Hell Would Break Loose’ If Le Pen Wins

In a show of relief that France averted the worst-case scenario for a runoff vote, U.S. investors are piling into exchange-traded funds tracking the country’s equities.

U.S.-listed French ETFs have seen inflows of $562 million in the past week, the most since Bloomberg began tracking the data in 2015. With polls signaling a victory for centrist candidate Emmanuel Macron in the final vote on May 7, investors are pricing out risks to political and economic stability from his anti-euro rival Marine Le Pen.

French equities surged 4.8 percent in the six sessions following the first-round vote on April 23, with the CAC 40 Index closing on Tuesday at its highest level since January 2008. Investors have poured $3.3 billion into the country’s ETFs this year, mirroring a broader preference for European equities amid bets for an earnings revival.

The recent rally in French stocks has pushed the country’s equities toward their smallest discount to European stocks since 2015. Banks and luxury shares have led gains, with Credit Agricole SA and Gucci-owner Kering SA up more than 10 percent since April 23.

Macron has the support of about 60 percent of voters compared with around 40 percent for Le Pen, according to a poll by Ipsos Sopra Steria released on Tuesday. Last month’s results averted a runoff between Le Pen and Communist-backed Jean-Luc Melenchon, which forecasters had dubbed the worst outcome for markets.

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