(Bloomberg) -- France’s CAC 40 Index is underperforming Germany’s stock benchmark by the most in three decades, and political turmoil in Paris is pointing to further declines.
Prime Minister Michel Barnier faces a no-confidence vote that looks likely to pass. The fall of his government is a scenario markets haven’t fully accounted for, according to Oddo BHF strategist Thomas Zlowodzki.
The CAC has fallen 3.1% this year while a version of Germany’s DAX Index that excludes dividends has climbed 16%, the biggest annual underperformance since 1993. France’s divided Parliament has been unable to tackle the country’s mushrooming budget deficit, raising concern that investors may shun the country.
“There is unfortunately room for a further correction in French equities,” said Zlowodzki.
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