Vital Stats on the French Equity Market – Goldman

This is a bit « old » (Sept 19, 2017), but Goldman published a series of research papers on 5 European countries (France, UK, Germany, Italy, Spain) where they have a broad look at the economy and have a couple of CEOs and their own analysts/economists comment on the trends in macro/business. 

Each research note combines both big picture illustrations on the domestic economy which selected indicators and on the local equity market.

The note on France has an interesting interview with economist Pierre-Olivier Gourinchas from UC Berkeley, and some views from the top at companies like JCDecaux, Vivendi or LVMH.

But overall, the comments/analysis in the document are not very useful.

For instance, per GS’s Lilia Peytavin, the disconnect between the French economy and CAC 40 performance is obvious : since 2011, the GDP grew on average 1% pa, while CAC 40 returned 9% pa. Of course, there is a simple explanation: CAC 40 members are large international economy for which France only represent a fraction of revenue and profit (excluding some heavy weights in sectors such as telecoms or utilities).

But nothing new under the sun here.

There is no forward looking guidance as to where the potential for earnings recovery is, except a lengthy discussion of reforms and their potential impact, and how the gap with other countries might close.

If you look at the following charts, you might consider that the valuation discount compared to history has a rational explanation in underlying fundamentals. But that’s it.

The report goes further promoting some exemplary companies that are supposed to « represent » France. Surprise, surprise, all of the referenced stocks are recommended with a « Buy » rating from Goldman equity research (Accor, Airbus, Total, Vinci).

In summary, apart a couple of interesting charts, the note provides few controversial ideas on France and the French equity market.

Here are the few charts I thought might be of any use. The views on stocks are probably worthless.

Stats on the French equity market

Source: Goldman Sachs

Addendum… Some of the macro indicators picked by Goldman.