This Sunday will witness the first round of voting in a French presidential election, which is likely to determine the future of the entire Eurozone. Belying initial indications, the contest has thrown up two surprise contenders on two extreme ends of the political spectrum. A victory for either candidate threatens to rupture the fabric of the economic union and disrupt the Euro project as a whole.

Conventional wisdom would call for avoiding European stocks completely at this point. But a new survey shows that fund managers have been scooping up more of the region’s stocks as valuations look increasingly attractive compared to their U.S. counterparts. This is why it may be a good idea to ignore political risks and pick up attractively priced European value stocks.

Pen-Melenchon Clash Raises Alarm

During this month, stocks in the Eurozone have declined by nearly 2% due to apprehensions surrounding upcoming French presidential elections. With the first round of voting scheduled for Apr 23, tensions are reaching a fever pitch over the emergence of two new contenders for the presidency. On the one hand, right wing candidate Marine Le Pen has gained in popularity. Among her key campaign promises is a pledge to discard the euro monetary unit, a decision which could threaten the entire currency union.

The other such candidate, left wing leader Jean-Luc Melenchon, wants to go even further. While his promises to increase wages and reduce working hours have caught the attention of the public, he also intends to impose a 100% tax on the rich. In case he wins, Melenchon would also lead France out of organizations such as NATO, IMF and the WTO.

But global fund managers have chosen to ignore such considerations. A recent Bank of America Merrill Lynch survey of global funds managers has revealed that investor enthusiasm toward the Eurozone has actually increased over the last 15 months. Meanwhile, fund managers’ portfolio allocation toward U.S. stocks is now the lowest in nearly 10 years.