French Stocks Struggle in 2024 Amid Political Uncertainty
French stocks faced significant losses in 2024, largely due to ongoing political risks and a decline in luxury spending.
French Stocks, Political Risk, Luxury Goods, CAC 40, Emmanuel Macron, China
Paris: French stocks have had a rough year. They ended 2024 in the red while other major markets saw solid gains. The CAC 40 index dropped by 2.2%, which is a stark contrast to the 19% rise in Germany’s DAX and 15% in Spain’s IBEX.
Things got tricky when President Macron called for a snap election in June. This move backfired, leading to a budget deadlock and a downgrade in France’s credit rating. As a result, French stocks and bonds took a hit.
The political mess widened the gap between French government bonds and German ones, reaching levels not seen since 2012. This turmoil particularly affected financial stocks and those tied to the domestic economy.
Luxury brands, which are a big part of the CAC 40, also struggled. Chinese shoppers cut back on spending, hitting companies like LVMH and Kering hard. Kering, the owner of Gucci, saw its stock drop by 40%!
Experts are cautious about the future. Olivier David from Vega Investment Managers mentioned that it’s too soon to tell if the CAC 40 will bounce back next year. He noted that the luxury market is heavily reliant on China, so any stimulus there could help, along with clearer political signals from France.
Overall, 2024 was a tough year for French stocks, and many are hoping for a better 2025.