Analysts’ view: Socialist Hollande wins French presidency


The following are reactions to the victory of Socialist candidate Francois Hollande in France’s presidential election on Sunday.

BNP Paribas economist, Dominique Barbet

“It’s not a surprise. It’s a bit closer than expected, which is reassuring. It’s a comfortable victory and now it’s time to think about the future. The Socialist party is well set to win the legislative elections.

“The real question is whether the Socialist Party can win its own majority or whether it will have to rely on allied parties, like the Greens or the Communists as well as (Jean-Luc) Melenchon’s party.”

Arnaud Scarpaci, fund manager at Agilis Gestion, Paris

“Hollande’s victory has been priced in for a month now. Frankly, it won’t change the mood across Europe, at least on the short term. The immediate impact won’t be on the euro currency or the French debt, but rather on the stock market. The losers will be the investment banks such as Societe Generale and utilities linked to the nuclear sector such as EDF and Areva, in the cross hairs of Hollande, while construction groups such as Saint-Gobain will be the clear winners as Hollande has promised to build social housing.

Christian Jimenez, fund manager and president of Diamant Bleu Gestion, Paris

“Hollande’s victory has already been priced in by markets, however his promises made during the campaign have not been priced in, so there is risk on the downside if he stands his ground when he announces a first set of measures. There’s a clear need to boost economic growth across Europe, no question, but the debate is on how to achieve that without spooking investors. All in all, Hollande won’t be able to convince Merkel to soften her position on the need for austerity.”

Achilleas Georgopoulos, rate strategist, Lloyds TSB, London France

“The result is not unexpected...There could be a bit of an underperformance by French paper but nothing more than that. It was already priced in. A reaction could be more related to Greece rather than France. From what I’m seeing the two (pro-bailout) Greek parties are still struggling to get a majority...and that would overshadow the rest of Europe.”

Fabrice Couste, head of CMC Markets France, Paris

“It’s a logical victory for a candidate that has been ahead in the polls. Francois Hollande now faces the daunting task of reducing the deficit, using his ambitious fiscal reform program that could help bring in 45 billion euros in new taxes.

“His room of maneuver will be really tight, however, because major issues such as debt, unemployment, falling purchasing power are resurfacing all across Europe.

Derry Pickford, macro analyst, Ashburton

“The results are in line with expectations. As far as the relationship in Europe is concerned - whoever ends up running France it’s unlikely that they are going to want to jeopardies the Franco-German relationship because through it they are able to decide the direction of Europe and that partnership is too important and that will continue.

“Clearly Hollande is not going be fantastic as far as supply-side reforms in France are concerned and there are concerns about the top tax rate. I dont think in really think that will be implemented but the fears around what Hollande is planning will certainly act as a constraint on confidence in the French economy.

“Essentially when push comes to shove, Germany, especially now that Hollande has won the French election, will be under a lot of pressure to allow a little bit of leeway to the Greeks ... Whether the IMF will be as lenient is debatable.

David Thebault, head of quantitative sales trading, at Global Equities, Paris

“It may take a week or so for the markets to digest the results of the French vote, but in the medium term, it’s fuelling hopes of a new dynamic for Europe focusing on growth measures, not just austerity measures.

The vote in France, as well as in Greece, is a backlash against German’s posture in this debt crisis. People are saying: ‘enough austerity’. This might be a turning point for the region that could change Germany’s fiscal orthodoxy, bring a consensus on the need for Eurobonds and transform the European Central Bank into a ‘European Fed’ focusing on economic growth, not just inflation.”

Jean-Emmanuel Vernay, deputy managing director at Invest Securities France

“Hollande’s score isn’t as high as polls were predicting. The key will be to see who gets a majority in the upcoming parliamentary elections. Hopefully, the right or the left will get an absolute majority, with no need for concessions to the parties from the extreme left or right. The focus will also be on the European front, to see how the new French government will deal with Angela Merkel and more importantly, Mario Draghi.

Deutsche Bank economist Gilles Moec

“I think that the market reaction will be quite subdued. The news from Greece may, in the short term, be more important than from Paris.

“Everyone in Hollande’s entourage is very keen in calming down any concerns with Germany and this is very important because this is what is at stake in the next few days. I’m fairly confident that France and Germany can maintain a very strong common approach to European affairs.

“The issues for France are more in the medium term. There was nothing in Hollande’s platform about structural reforms, competitiveness and these are issues that will have to be addressed in the next two or three years.”

“The immediate concern is about Germany and how to deal with the euro crisis, especially if Greece becomes a problem again. Hollande has moved sufficiently in the last few weeks on his ideas about renegotiating the fiscal pact to make it perfectly workable.”