Could China's stimulus help French stocks?
STOXX 600 up 0.4%, record high
Luxury, autos, chemicals lead
Moncler surges on LVMH deal
Wall St futures lower
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COULD CHINA'S STIMULUS HELP FRENCH STOCKS?
French stocks have been a relative underperformer in recent months but China's stimulus could be a boon for the country's blue-chip index, according to strategists at BCA Research.
The CAC 40 .FCHI is up just 2.6% this year, compared to a near 10% gain for the pan-European STOXX 600 .STOXX - which hit a record on Friday - and a 15% gain for Germany's DAX .GDAXI.
The overall performance since Macron announced a snap election in June paints a similarly gloomy picture. The CAC 40 is down almost 3%, versus a 1% gain for the STOXX 600 and a near 5% gain for the DAX.
"French stocks remain depressed relative to Euro Area benchmarks," writes Mathieu Savary, chief European strategist at BCA Research.
"Due to its heavy exposure to consumer discretionary names that would benefit if Chinese consumers responded to fiscal stimulus, the CAC 40 is attractive relative to the EURO STOXX 50," Savary adds.
Around 31% of the index is made up of consumer cyclicals, according to LSEG data, including luxury giants LVMH and Hermes, and carmakers Renault and Stellantis.
BCA says it has adopted a tactical hedge today by going overweight French stocks within European benchmarks.
(Samuel Indyk)
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