Emmanuel Macron has won the hearts of France’s business leaders, who are counting on him to push through radical reforms to sustain an economic recovery that’s been a long time coming.
Executives from Société Générale to building materials firm Cie de Saint-Gobain have spoken of a brighter mood since the new president was elected in May, partly on hopes that he will help deliver the sustained robust expansion his predecessors could not inspire. Anticipation of tax rebates, tighter government spending and an unprecedented clipping of protective labour laws have also perked up confidence readings.
Business confidence is near a six-year high, while optimism among consumers has also steadily improved. The Bank of France will release its July sentiment reading on Wednesday, and will also publish its first estimate for third-quarter growth.
“Macron’s election has stoked up hope,” said Philippe Waechter, the director of economic research at Natixis Asset Management. “Higher investment and hiring prospects in surveys reflect a honeymoon that can put an end to French growth lagging euro-region peers, provided the Élysée lives up to expectations.”
The president wants to pursue the deregulation many other European countries already implemented to improve their growth potential. While corporate leaders’ faith is providing impetus for change, he needs their view to spread as his narrow voter base exposes him to traditionally potent local resistance. Mr Macron, a former banker, is not aligned with a major party and never held elected office before he was chosen amid record abstention.
France’s success also has implications for the 19-nation euro zone, where its second-largest economy has long failed to provide support, leaving Germany as the solo engine. Better growth would broaden the recovery and help an upswing which the European Central Bank is banking on to boost inflation.
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Read more:
France and Germany aim to tighten tax regime on foreign firms
Paris vows to beat Frankfurt in fight for financial power post-Brexit
Euro zone regaining health but risks remain
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“There is definitely a better mood in France, a better level of confidence,” said Frederic Oudea, the chief executive of Société Générale , said last week. France’s third-largest bank saw its long-term investment loans to small and medium-sized firms increase 10 per cent in the second quarter, he said.
The economy is currently enjoying its strongest continuous expansion since 2011, with GDP up 0.5 per cent in second quarter. The benchmark CAC 40 Index has risen 7.3 per cent this year, ahead of the Stoxx Europe 600 Index.
The composite PMI remains elevated, even though it’s slipped for the past two months, signalling some softening. Economists expect 0.4 per cent growth this quarter, according to a Bloomberg survey.
“Growth may be ebbing a little, but should remain fast enough to help unemployment drift lower,” said Bloomberg Intelligence economists including Jamie Murray on Tuesday. “Macron has a rare opportunity to lift the economy’s longer-term prospects by pushing through radical reforms aimed at making the labour market more dynamic.”
Mr Macron already has business-friendly credentials. As an adviser to the former president François Hollande, he enacted steps such as €40 billion (Dh172.52bn) in tax credits.
“I have started to see in the last few weeks a small change of attitude which is positive,” said the Saint-Gobain boss Pierre-Andre de Chalendar said in July. “I am more optimistic about France than I was six months ago and also than I was two months ago.”
Mr Macron’s toughest task may be overhauling labour laws. Disappointing job creation was among the reasons Mr Hollande became the first president in half a century not to seek re-election. Despite a drop in approval rating, the government spokesman Christophe Castaner said last week the timetable is unchanged, with new rules to be enforced next month.
“France still has a level of growth which is beneath its potential,” said the finance minister Bruno Le Maire told Bloomberg last week, maintaining a 1.5 per cent growth forecast for 2017. “France must do better than its major partners such as Germany, not worse. That’s our target and we’ll stick to it.”
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Sam Smith
Where: du Arena, Abu Dhabi
When: Saturday November 24
Rating: 4/5
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Company%20Profile
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HOW TO WATCH
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Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
Tuesday's fixtures
Kyrgyzstan v Qatar, 5.45pm
The six points:
1. Ministers should be in the field, instead of always at conferences
2. Foreign diplomacy must be left to the Ministry of Foreign Affairs and International Co-operation
3. Emiratisation is a top priority that will have a renewed push behind it
4. The UAE's economy must continue to thrive and grow
5. Complaints from the public must be addressed, not avoided
6. Have hope for the future, what is yet to come is bigger and better than before
More on animal trafficking
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Honeymoonish
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
THE SPECS
Engine: 3.5-litre supercharged V6
Power: 416hp at 7,000rpm
Torque: 410Nm at 3,500rpm
Transmission: 6-speed manual
Fuel consumption: 10.2 l/100km
Price: Dh375,000
On sale: now
