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Le Pen or Melenchon election victory would trigger a correction, Citi says

21/04/2017 11:37

(ShareCast News) - The most likely outcome of the French elections was a victory for either the centrist or centre-right candidates, Emmanuele Macron and Francois Fillon, strategists at Citi said. Yet there is a non-negligible risk that either the far-right FN's Marine Le Pen or the far-left Jean Luc Melenchon might come out on top, triggering a correction in both European and French stocks of between 5% to 10%, the investment bank said. Citi put the odds of a Macron victory at 35% while the probability of Fillon overcoming was seen at 30%. Le pen's chances of becoming president were pegged at 25% with Melenchon at 10%. Conversely, a win for either Fillon or Macron could entail between 10% to 20% upside to the end of 2017. "A risk-off outcome would mean our Overweight stance on Continental Europe would suffer.

US equities should outperform, as in the 2012 EMU crisis.

Amongst sectors, defensives are likely to outperform."

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