LIVE MARKETS-Don't write off French stocks

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DON'T WRITE OFF FRENCH STOCKS

Investors are watching France. The country's 10-year government bond yield touched 5% for the first time since July 2022 on Wednesday as it grapples with a fragmented parliament, uncomfortable budget negotiations and widespread protests before next year's the presidential election.

France's stock market has also underperformed, with the CAC 40 .FCHI down 3% this year, compared to an 8% rise for the STOXX 600 .STOXX and a 4% jump for Germany's DAX .GDAXI.

That dynamic is creating opportunities.

"The CAC 40 in particular is not super domestically exposed," said Rushabh Amin, portfolio manager for the multi-asset team at Allspring Global Investments.

"That said, we have seen this in the past and we expect to see it in the future — top level rate moves effectively driving flows out of the underlying domestic market regardless of where the revenue is coming from."

But, on a relative basis, Amin believes that France could start to look more attractive over a 3- to 6-month timeframe.

"As we start to see the impact of the noise starting to whittle out and the rate level starting to normalise, you could make a good case that French equities are starting to look a bit more attractive on the margin," Amin said.

(Samuel Indyk)

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