France

Vivendi only half-solves its valuation discount

22 Jul 2024

The 11 bln euro French media group is spinning off and listing pay-TV arm Canal+ in London and ad group Havas in Amsterdam. It should unleash value. Yet the remaining listed bits, holding media assets and a ragtag of investments, may just suffer from an even more acute markdown.

Meta stake may blur vision for Ray-Ban maker

18 Jul 2024

The $1.2 trln tech giant may buy 5% of eyewear group EssilorLuxottica. It’s a show of confidence in the companies’ smart glasses partnership. But the investment could complicate the Paris-listed firm’s governance and limit its options for working with rivals like Apple.

Public investment dearth is Europe’s growth killer

17 Jul 2024

Germany will spend a paltry 0.15% of GDP on new government-backed projects in 2025. Other European countries are tightening their belts for fear of having to raise taxes. But failing to invest enough in the green transition, infrastructure or defence will cripple their economies.

European boards have too little skin in the game

17 Jul 2024

Non-executive directors at big US companies get 60% of their pay in equity. That’s rare in Britain, France and Germany, where many board members own a slither of stock. Cash fees warp incentives, discourage engagement, and risk making Europe’s capital markets less competitive.

Buyout barons’ IPO castoffs trade may be repeated

16 Jul 2024

Clayton Dubilier & Rice’s $2.6 bln offer for software firm Exclusive Networks would see it scoop up a stock that has drifted since a 2021 listing. Majority-owner Permira would get a handy way to cut exposure. A long list of struggling initial offerings mean more deals may follow.

Scor investors’ bad year can still get worse

16 Jul 2024

The French insurer’s shares fell 25% on Tuesday due to troubles in its life arm. Scor’s investors could have sold to rival Covéa six years ago, at twice the current valuation. If the looming hurricane season leads to big losses in 2024, they may be obliged to pump in new equity.

European board pay requires a US-style overhaul

16 Jul 2024

Non-executive directors at UK and EU-based firms own little equity in the companies they oversee. In this Exchange podcast, Liad Meidar of the hedge fund Gatemore argues that this is a problem, while Peter Boreham of the pay consultancy Mercer explains why it’s hard to change.

Tariffs offer poor airbag for Europe’s carmageddon

15 Jul 2024

Volkswagen, Renault and others still have miserable valuations despite Brussels threatening China with penalties on electric-vehicle imports. The duties may not be big enough, and could even hurt Western players. Possible fixes, like rowing back on carbon targets, look tricky.

Markets will keep shaky French regime on a leash

11 Jul 2024

A left-wing coalition and Emmanuel Macron’s centrists are vying for control of France’s government. Fiscal discipline may fall by the wayside. Paris is already being disciplined by Brussels for its high deficit and debt. A reliance on foreign investors leaves little wiggle room.

French election shock puts Macron in new quandary

7 Jul 2024

The left will dominate France’s parliament after Sunday’s runoff, while Marine Le Pen’s far right suffered a surprise setback. President Emmanuel Macron will struggle to build a centrist coalition. But appointing a left-leaning prime minister would leave investors on edge.

Data centre boom reveals AI hype’s physical limits

4 Jul 2024

The investor frenzy over artificial intelligence assumes there will be enough infrastructure to support apps like ChatGPT. But a $1 trln rush to build data centres faces planning restrictions and energy constraints. That will limit processing power and push up costs for users.

Le Pen will fail as star of Meloni in Paris

3 Jul 2024

Markets are relatively calm about the prospect of a far-right government after Sunday’s second electoral round. They may believe that Marine Le Pen’s party would mimic the apparent moderation of Italy’s Giorgia Meloni. Her fiscal plans, inexperience and beliefs suggest otherwise.

The risk of a euro crisis is rising

1 Jul 2024

While political instability in France adds to the single currency’s fragility, it probably won’t trigger another meltdown. But euro zone members’ high debts, pressing spending needs and low growth at a time of rising nationalism and geopolitical conflict are storing up trouble.

Far-right win leaves France amid shock and chaos

30 Jun 2024

Marine Le Pen’s party received 34% of the votes in French parliamentary elections, according to exit polls, and could win a majority of seats in the second round. If it doesn’t, the ensuing stalemate might be preferable to a government playing fast and loose with the economy.

France raises ghosts of last euro zone crisis

27 Jun 2024

French voters will go to the polls this weekend for the first round of the parliamentary elections. In this Viewsroom podcast, Breakingviews columnists discuss why the country’s rising bond yields and the risks of contagion will be uncomfortably familiar for investors.

French left is too divided to soak the rich

27 Jun 2024

France’s leftist parties have vowed to lift wages and control prices if they win the upcoming election. That would cost 150 bln euros and be funded by higher taxes on the wealthy. Yet fierce splits between moderate socialists and hardliners mean the well-to-do can rest easy.

Olympic Games can withstand Atos farce

26 Jun 2024

The French firm managing the Paris sporting event’s IT backbone is close to bankruptcy. It may find 800 mln euros of short-term financing from President Macron’s government and loans even after creditors ditched restructuring talks. But its future after the Games is less certain.

Bond traders’ rate-cut party is yet to get going

26 Jun 2024

Central banks from Ottawa to Frankfurt are reducing rates. Bond prices should be rallying, but an index of euro zone debt is up just 0.1% since the ECB eased borrowing costs this month. While French elections are one reason why, tight US monetary policy is the key constraint.

Why the French vote also matters to Italy

25 Jun 2024

The outcome of snap elections in France will reverberate beyond its borders. Debt-laden Italy is particularly exposed if borrowing costs rise. In this Exchange podcast, former top Treasury official Fabrizio Pagani discusses Rome’s fiscal challenges in a changing EU landscape.

Airbus hit leaves investors flying without a radar

25 Jun 2024

The $110 bln planemaker’s shares fell 11% after it said that engine shortages scuppered its delivery target. The group is struggling to capitalise on rival Boeing’s woes. Supply-chain uncertainty is also stopping the wider sector from putting the pandemic in the rear-view mirror.