As early as Sunday, the French will go to the polls to cast their votes in the first round of parliamentary elections. Uncertainty is reaching its limits all the time, nevertheless, we are seeing a moderate stabilization in this aspect as well. Fears of a spending surge have stabilized, helped by signals from Marine Le Pen's far-right National Rally (RN) that as a formation it will be fiscally responsible. However, the regional banking sector continues to sustain double-digit losses all the time, and it is this sector of the European economy that investors will turn their eyes on in the coming days.
Investors are concerned about the potential "interventionist economic policies" of National Rally, which could theoretically open the way to imposing taxes on windfall profits and limiting the ability to pay dividends/buy back shares. These concerns are further heightened by France's weak fiscal position.
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Since the beginning of the month, shares of major French banks have lost more than 11%. Counting from this year's highs, however, these banks are already down more than 20%. All of the three companies are currently trading within -1 standard deviation near the 3-year average for the estimated PE multiple. Source: Koyfin
Credit Agricole (ACA.FR) shares fell below the 200-day exponential moving average (golden curve) for the first time since July 2023. Source: xStation
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