Mayor concerned about Le Pen's election... "Brexit and Trump's victory expected to cause sudden shock"

Marine Le Pen, the National Rally (RN) candidate in the French presidential election
[Photo by AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As the French presidential runoff election is set to take place on the 24th, there are growing forecasts that if Marine Le Pen, the challenger from the Rassemblement National (RN) party aiming to unseat President Emmanuel Macron, gains the upper hand, the market will experience significant turbulence the following day, on the 25th.

On the 19th (local time), Bloomberg reported that most financial firms, from Citigroup to Amundi Asset Management, are underestimating the possibility of an upset victory by Le Pen, expressing concerns over this scenario. These financial institutions are advising purchases of products from other regions such as the United States or Austria due to concerns about volatility in the European markets.

If the voting results make Le Pen’s chances of winning more visible, financial firms anticipate that the market on the 25th, the day after the election, could experience major fluctuations similar to those seen after the 2016 Brexit decision or the election of U.S. President Donald Trump.

European stock markets are expected to plunge, and the yield on French 10-year government bonds is likely to surge, significantly widening the spread with German bond yields. The spread between French and German 10-year government bonds is a key indicator of investor confidence; a widening spread signals a decline in investor trust. The value of the euro is also expected to drop sharply.

Bloomberg stated, "The final outcome will need to be observed until after the general elections in June," adding, "It will only then become clear whether Le Pen can secure a majority to support her proposals to review free trade agreements (FTAs) and border issues."

Currently, most polls predict that President Macron will defeat Le Pen, but it is noted that the situation could change unpredictably. Recent polls forecast that President Macron will receive 55.5% of the runoff vote, while Le Pen is expected to get 44.5%.

Eric Hachid, a trader at Aurelia BGC, said, "(If Le Pen is elected) it would be a terrible day for the market," adding, "I still believe President Macron will win, but the results of the debate between the presidential candidates on the 20th will be important."

This content was produced with the assistance of AI translation services.