BUSINESS-ECONOMY
After months of underperformance for French equities, last week saw a little relief surge. However, given that France's political instability is expected to persist and the country's overstretched public finances are discouraging long-term investment, this might be a brief rally. Investors have enjoyed double-digit returns across most global stock markets. However, France's CAC 40 index is in the negative, down 1.5 per cent, and on track for its worst year in over a decade. The French index has lost out to other European markets too. The decision to hold a general election in June by President Emmanuel Macron is largely to blame. Months of political infighting ensued when Macron's gamble failed. That move deprived the nation of the steady leadership it desperately needed to rein in a budget imbalance that ranks among the worst in Europe. French credit rating agencies have issued a dire warning that the country's finances are spiralling out of control. They cited the government's disintegration after a vote of no confidence and borrowing prices surpassing those of Greece. Claudia Panseri, chief investment officer for France at UBS Wealth Management, said, "The situation could degenerate if the deficit or even projections of the deficit show a deterioration." Panseri added, "I think that insurers and banks will continue to underperform." Still, French stocks had their best week since February. Some investors are betting that the worst of the news has already been priced in. But several other investors think the relief rally won't last and the CAC 40's potential gains in 2025 will be capped. None
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