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News

Duo Le Pen and Mélenchon scares markets

21.04.2017
Company: Komerční banka, a.s.

The French elections are around the corner with Emmanuel Macron, Marine Le Pen, François Fillon and the quickly catching up radical leftist candidate Jean-Luc Mélenchon being the four frontrunners. Macron and Le Pen are still leading the polls, but the latest polls suggest it will be a close call with Fillon and far-left candidate Mélenchon not far behind, especially in light of
a relatively large proportion of undecided voters.

The presidential elections will most probably bring increased volatility to markets. A victory by the more pro-business couple of Macron and Fillon in the first round should bring relief to markets. Conversely, a victory by the ultra-right candidate Le Pen and the radical leftist Mélenchon would bring an earthquake to financial markets. Mélanchon plans to drastically increase taxes, and Le Pen’s emphasis on protectionism and monetary autonomy could prove a toxic cocktail not only for French equity markets. The highest risk is probably posed by the potential final victory of Le Pen, which would bring the risk of France‘s exit from the European Union. Although a full Frexit is rather a distant possibility, the related uncertainty could lead France into an economic recession and abort the EU’s fragile macroeconomic recovery.

Richard Miřátský
(420) 222 008 560
richard_miratsky@kb.cz

More information in the attached report.

Tags: Finance | Business Development | Politics |

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