Who Will Gain From Hollande Win in France?
Assistant Editor, CNBC.com
With both presidential and general elections coming up in April, May and June, France is on the verge of a complete political reshuffle.
The polls show French President Nicolas Sarkozy and his socialist challenger Francois Hollande racing neck-and-neck to victory in the first round of the presidential elections on April 22.
Both candidates have set out a raft of economic reforms to attract voters. But financial markets appear wary of a Hollande victory.
French banks in particular will be very sensitive to the outcome of the presidential elections due to two factors, Laurent Deydier, portfolio manager at Banque Jean-Philippe Hottinguer, told CNBC.com.
In the case of a Hollande victory, "French CDSs and OATs (the French long-term sovereign bonds) would be under pressure," Deydier said, as "there would be worries over the French government’s management of public funds, its capacity to reduce debt and the European treaty."
Francois Hollande has said he wants to renegotiate the EU fiscal pact that was agreed upon by 25 EU member states last year and is aimed at curbing excessive deficits.
The socialist candidate wants to separate the banks’ retail and investment banking activities.
"Investors could get rid of banks due to the lack of visibility over the question," Deydier said, "especially SocGen and Natixis , as they are the most heavily dependent on corporate and investment banking among French banks."
In a speech in January, Hollande said his biggest rival was “the financial world".
A Hollande win could be both positive and negative for the housing sector, Deydier explained.
Hollande’s deficit reduction plan focuses on increasing taxes rather than on reducing spending.
“Real estate companies are companies that benefit a lot from tax loopholes,” Deydier said, “so all the French mid-caps in that sector—such as Unibail Rodamco —should suffer,” he said.
On the other hand, both the construction and construction material sectors can expect a bounce, “in both cases, but especially if Hollande is the winner,” Deydier explained.
“There is an important deficit between housing supply and demand in France,” Deydier said, “and both candidates include construction aid programs.”
“Real estate developer Nexity has a tendency to rise and fall very rapidly depending on announcements,” Deydier said.
Construction material manufacturer Saint Gobain , he added, "is very strong in both new construction and renovation… It should benefit more from it than Lafarge which is too diluted.”
In the same sector, Deydier also mentioned housing equipment manufacturer Legrand as a potential winner in the left-wing-win scenario.
A Hollande win would also help the nursing homes sector, according to Deydier.
“Companies such as Orpea , Korian or Medica ,” which are the leaders on the French global care facilities scene “could benefit from the left wing plan to make nursing homes more widespread and accessible,” Deydier said.