A Primer on France’s Presidential Election and What It Could Mean for Your Investments

May 5, 2017

By Patrick Ercolano, CFA, MBA
Portfolio Manager

On May 7 (yes, a Sunday!), French voters will go to the polls to choose their new president. If you haven’t been following this election, here’s everything you need to know to get up to speed.

France’s current president: François Hollande

François Hollande has been president of France since 2012 but he didn’t run for re-election, making him the first incumbent president not to do so since the Fifth Republic was founded in 1958. His approval ratings were so low that his chances of winning were negligible.

French election cycle

Unlike in Canada, where elections are held outside a fixed schedule, elections in France are held every five years. There are two rounds in the French election, if no candidate gets an absolute majority in the first round. On April 23, voters had 11 candidates to choose from and the following four garnered the most votes:

  • Emmanuel Macron, En Marche!: 24.0%
  • Marine Le Pen, Front National: 21.3%
  • François Fillon, Les Républicains: 20.0%
  • Jean-Luc Mélenchon, La France insoumise: 19.6%

Emmanuel Macron and Marine Le Pen have advanced to the second round, which will be held on May 7. All electors vote directly for their candidate of choice.

The centrist candidate: Emmanuel Macron

Macron is 39 years old and has never run for election before. A centrist candidate, Macron is pro-Europe, pro-euro and pro-business, but also an ex-banker with a leftist tendency. Although he has a more open-door policy on immigration than Marine Le Pen, he wants to create a security force of EU border guards. He has also vowed to reform the French economy.

The far-right candidate: Marine Le Pen

Marine Le Pen is 48 years old, the daughter of Jean-Marie Le Pen who founded the National Front in 1972. Le Pen, a far-right candidate, has called for France to exit the eurozone and has emphasized her party’s traditional stance against immigration. 

What the polls are saying

Overall, polls have indicated that France will most likely see Emmanuel Macron become the next—and youngest—president of France. Given how Macron’s policies are likely to support the euro and the European Union, this could be the swaying factor for voters.  

There has been lots of debate in the media about the accuracy of polls, particularly since polls were close during the Brexit referendum and the U.S. election. In both of these cases though, the results were clearly within the margin of error and there were, in fact, no serious issues with the polls.

Despite fears expressed in the media that Le Pen could still pull off a victory, various polls indicate that a Macron win is expected, with more than 60% of the vote. A recent study of French election polls shows that polls have been extremely accurate over the last 35 years.1

Impact to MD clients?

The impact of the election on our clients’ portfolios will likely be very limited, regardless of who wins.

The MDPIM Global Tactical Opportunities Pool, which was launched April 28, is positioned with a small negative on the euro—that is, it is slightly underweight in euro-denominated holdings versus the benchmark.

Generally, politics have a greater impact in the long run (five to 10 years) than in a 12-month period. When we consider the political impact on investment decisions, our research focus is on things that truly matter—mainly earnings, economic growth and interest rates.

I’ll be tuning in to the media coverage on Sunday, which should be entertaining. But I expect global markets will be yawning the next day.  

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