France: Five things you may not know about me

France: Five things you may not know about me

Macro
Christopher Dembik

Head of Macroeconomic Research

Summary:  Here's my short list of positive things you may not know about France.


In today’s morning note, I want to focus on something a bit different than the impact of the coronavirus. My colleagues and I have largely covered the topic over the past few days. There has been quite a long time I wanted to write about the positive aspects of the French economy and what have changed in recent years. During my frequent business travels in Europe and in MENA region, I noticed that clients have too often a wrong image of France. With this in mind, here’s my short list of positive things you may not know about France:

Investing in the French stock market is basically investing on luxury. There is no trick to invest successfully on the CAC 40 index. Since the GFC, the French benchmark has entered into a new cycle dominated by luxury stocks (1/3 of the total capitalization) which have replaced financial stocks (about 11% of total capitalization nowadays) as main driver of growth. The following five stocks explain roughly 70% of the increase of the CAC 40 index since 2015: LVMH, Kering, Hermes, L’Oréal and Airbus.

Macron’s pension reform will be fairer. It is far to be perfect, but it is moving in the right direction. Macron’s left-wing inspired reform will reduce inequalities between highest and lowest pensions and, at the same time, it will push to work longer in order to have full retirement benefit. According to the impact report on pension published by the Council of State (which is based on various scenarios), one of the main advantages of the reform will be that pensions will grow on average by 29% for the poorest while pensions will only increase on average by 1% for the wealthiest.

The labor market is showing great signs of improvement. The best indicator to track is the share of CDI (open-ended contracts) in new hiring. It is currently standing close to its highest level since Q1 2001, at 49.2%. Looking by company size, the most impressive trend concerns new hiring by small companies (0 to 19 employees). The share of CDI is at 51%, confirming the labor market is finally on the right path!

Debt does not really matter. Public debt has increased by 39 billion euros in the third quarter of 2019, which represents roughly 50% of the total amount collected on income tax revenue. However, this is no time to panic. The debt is only a problem if debt service is unmanageable, which is clearly not the case for France. Net government interest payments are only about 1.1% of GDP, which is slightly more than Germany (0.4% of GDP) and less than the average amount paid by the OECD countries (1.7% of GDP).

Everything is always about politics. In France, the economic cycle is often influenced by the political agenda. In 2019, business failures decreased by 4.2% and this great news is mostly due to the positive performance of the construction sector. Guess what? Construction spending increased in many cities ahead of the municipal elections that will take place in March.

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Capital Markets UK Ltd. (Saxo) and the Saxo Bank Group provides execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation. Access and use of this website is subject to: (i) the Terms of Use; (ii) the full Disclaimer; (iii) the Risk Warning; and (iv) any other notice or terms applying to Saxo’s news and research.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer for more details.

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992