French stocks are heading for their weakest performance since the Eurozone crisis, as investor concerns over tariffs and political instability, combined with weak demand for luxury goods, take their toll. The Paris Cac 40 index has fallen by 3% this year, compared to a 6% gain for the broader Stoxx Europe 600 index.
The lack of demand from China and internal economic stagnation have compounded these challenges. The ongoing political turmoil, including a change in prime ministers, has also weighed heavily on investor confidence, with the country’s fiscal situation adding further strain.
The luxury goods sector, a cornerstone of France’s stock market, has been hit by a slowdown in China’s economic recovery post-pandemic. The once-booming market for high-end products from brands like LVMH and Kering has been stifled by concerns over a potential sharp economic slowdown in China. Shares of these companies have seen significant drops, with LVMH down 12% and Kering falling by 40% this year.
As the French market falters, more companies are considering expanding their presence in international stock exchanges. Notable companies such as Canal+ and TotalEnergies are exploring listings outside of France, with some even contemplating moves to the US.
This shift highlights the broader struggles facing France and the political and economic challenges confronting Europe, especially as it faces competition from China and the looming risk of a global trade war. With the Cac 40 poised to end the year in negative territory, the future of French markets depends on overcoming these significant hurdles.
