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French Businesses Hedge Hard, Fear Le Pen Victory

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Saagar Enjeti White House Correspondent
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The French bond market is in turmoil amid concern that National Front candidate Marine Le Pen will win the French presidential election in April, the Financial Times reports.

France’s election turmoil is focused on a corruption scandal surrounding center-right candidate Francois Fillon. Fillon is accused of funneling hundreds of thousands of state funds to his wife under the guise of hiring her as his parliamentary assistant. Fillon refused to drop out of the race Monday saying he was the victim of a “media lynching.”

France’s elections occur in two stages, with the second stage being a run-off between the two highest-grossing vote takers. Le Pen currently leads in polls in the first round voting, but is roundly expected to lose in a match-up against any of her opponents. French investors however are wary of overestimating the resiliency of polls, and are taking Le Pen’s anti-Euro policies into account.

“Markets underpriced the political risks in 2016 and they are determined not to do the same again,” one investment manager told the Financial Times. “Investors want greater rewards for the risks they see in French, Dutch, German and possibly Italian elections this year to destabilize the region,” he continued.

Le Pen launched her official campaign Sunday echoing nationalist themes against what she called “two totalitarianisms,” which she believes are globalization and Islamism. Le Pen pledged to hold a referendum on France’s EU membership, secure France’s borders from Syrian refugees, and possibly pull France out of NATO.

A French exit from the EU would likely throw financial markets into chaos, because France is a member of the eurozone.

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