Assessing the impact of potential tax hikes on French stocks
STOXX 600 up 0.4%
Banks drag
Real estate leads, up 1.4%
Euro zone inflation eases
Oct 1 (Reuters) -Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
ASSESSING THE IMPACT OF POTENTIAL TAX HIKES ON FRENCH STOCKS
France finally has a new government, but investor jitters remain fraught amid media reports that new PM Michel Barnier is considering increases in corporate tax and a tax on share buybacks.
Barclays equity strategists have taken a stab at assessing the impact of such potential hikes.
"According to press reports, the French government may raise the corporate tax rate from 25% to 33.5% for companies with
turnover above 1 billion euros. This would be a hit of ~2.5pp on CAC 40 EPS growth for 2025," they write.
Barclays see financials, communication services/media and utilities as the most negatively exposed, though overall they say some share price pullback might already be priced in.
The CAC 40 .FCHI is down 4.7% since the general election was called in early June, underperforming the broader STOXX 600 .STOXX, which is virtually flat.
"For French banks in particular, our analysts see the potential tax rate increase removing up to 4% of EPS," write the Barclays strats.
BNP Paribas .BNPP.PA could see a 0.3% impact on earnings, while that figure for Credit Agricole CAGR.PA and Societe Generale SOGN.PA could be 0.5%, the bank said.
The trio of French banks' shares are already underperforming, down between 6%-14.3% since June 7, versus a 1.1% decline in the euro zone banks basket .SX7E in that time.
Luxury is another area that could feel the pinch.
"A 1pp increase in the FY25 effective tax rate would lower EPS growth by -1.5pp for LVMH, -1.5pp for Kering and -1.4pp for
Hermes."
Within utilities, they estimate the hit to EPS for Engie ENGIE.PA at c.-0.5% and Veolia VIE.PA at c.-0.15%.
Media names could be particularly hard hit, especially broadcasters, says Barclays, given their lack of geo-versification.
In insurance, a 0.31% and 0.26% respective impact for Generali GASI.MI and Axa AXAF.PA could be in store.
"Although French stocks have underperformed recently, they still look too high vs. the level implied by OAT spreads," say the Barclays strats.
They remain cautious on France domestic exposure amid lingering political and economic/fiscal uncertainty.
(Lucy Raitano)
*****
EARLIER ON LIVE MARKETS:
EUROPEAN BANKS FEEL THE SQUEEZE AS MORGAN STANLEY DOWNGRADES SECTOR CLICK HERE
LUXURY DOWN AGAIN, AUTOS STEADY AS Q4 KICKS OFF CLICK HERE
EUROPE BEFORE THE BELL: FUTURES STEADY, M&A ON THE RADAR CLICK HERE
MILDER INFLATION SEEN SETTING UP RATE CUTS CLICK HERE
Reporting by Jesus Calero
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
