With the first round of the French election in the rearview mirror, there are clear winners and losers. With Emmanuel Macron and Marine Le Pen facing the chosen two to face off in a May 7 election, Morgan Stanley says the outcome will be benign: markets will win.It will be interesting to see if Horseman Capital Management’s Stephen Roberts, who boldly proclaimed before the election that the result won’t matter and recommended buying European stocks despite election concerns several weeks ago listened to his own advice. Morgan Stanley’s Grahm Secker is on the list of those who recommended buying in Europe in March. Now, this analyst along with two others is reiterating their bullish call in the region, according to Global Macro Forum slides.
Macron, the well-connected centrist campaigning under an “independent label,” not Marine Le Pen, is expected to win in May
When well-connected political novice Emmanuel Macron garnered the most votes in the French election Sunday, garnering 23.7% among a broad field of contenders, it sent a sigh of relief among market participants, some of whom were aware of the deeper negative consequences if France were to leave the euro.
The former Rothschild investment banker ran as a centrist and “independent,” eschewing established political parties in his first attempt to gain elective office. While he is embracing the “outsider” label, Macron worked as deputy secretary general under current French President Francois Hollande, who quickly endorsed his presidential bid.
While Marine Le Pen was close in second place, at 21.7%, those handicapping the upcoming race are confident of a Macron victory, including Morgan Stanley’s Senior European Economist Daniele Antonucci, Chief European Equity Strategist Grahm Secker and Head of Global FX Strategy Hans Redeker.
Macron is expected to win in the second round with “high probability,” according to Antonucci, as Morgan Stanley’s analysis shows more than a 60% probability for such an event as all mainstream parties are endorsing Macron. Even those who voted for radical communist Jean-Luc Melenchon, who held negative views on the EU similar to Le Pen, are planning on voting for Macron by a 56% to 13% margin, Morgan Stanley noted.
