The elections held in France over the weekend may not have captured record pay-per view dollars like the DeLa Hoya-Mayweather fight. Nevertheless, the intrigue as well as the slogan, “The World Awaits,” fit both bills.

In one corner, Segeline Royal, a devout socialist, attempted low blows to derail the competition. Her ineffective shots yielded little more than contempt, however. Sarkozy, a pro-American, pro-capitalist reformer captured France’s imagination as well as a solid majority of its voting public.

At first glance, one might wonder why this matters to investors. Yet a quick perusal of the iShares MSCI France Index Fund (EWQ) shows that it is fundamentally more attractive than other European nations. Its P/E is lower than nearly all of the EU at a P/E of 13.87.

Similarly, the last six months show how EWQ appears to be pulling away from the most popular European proxy, iShares MSCI EAFE Index (EFA). This may be due in part to the expectation that Sarkozy’s pro-capitalist reforms may make it through the French parliament.

Ewq_2

If you feel a bit light on your European exposure, you may wish to use both the fundamental and technical evidence which support a run for French stocks. At the same time, when any part of Europe suffers a setback, France participates. It makes sense to keep a trailing stop order on your allocation to EWQ.

Disclosure statement: Some of Pacific Park’s investment clients may hold positions in any of the investments mentioned above. 

Leave a Reply