French election outcome unlikely to rock local bourse: analysts

Taipei, May 6 (CNA)
The outcome of the French presidential election Sunday will likely have only limited impact on the local bourse, analysts said that day.

Despite wide expectations that French President Nicolas Sarkozy's Socialist rival, Francois Hollande, will win the second round run-off vote, the possible power shift in France will only have a limited impact on global stock markets, said Wu Wun-tong, chief investment officer of Capital Investment Trust Corp.

Wu also noted that the second half of the year is traditionally a strong season for electronics manufacturers. Market momentum is expected to pick up in June, which makes May a good buying point for investors, he said.

Echoing Wu's view, Yen Jung-hung, a fund manager with JPMorgan, said that despite Hollande's opposition to austerity policies, the ongoing European debt crisis will have limited impact on the local bourse.

Yen said the results of the European Central Bank's second Long-Term Refinancing Operation have been effective, which has helped boost stock markets around the world and have eased the strain on European banks.

He added that if Sarkozy wins a second term, the result will have an even more limited impact on the local bourse, since Sarkozy favors austerity measures, and the market focus will shift back to domestic issues such as increased electricity prices and the proposed capital gains tax.

Tang Chih-chung, a fund manager at Prudential Financial Securities Investment Trust Enterprise Co., said that if Hollande does win, it will only confirm market expectations and could help boost market performance.

Meanwhile, Yang Chia-yen, a director at the Taiwan Institute of Economic Research, said the European debt crisis is unlikely to be resolved in the near future, no matter whether Sarkozy or Hollande wins.

If Hollande wins, he will likely impose expansionary financial policies to boost the economy and improve the job market, which will be in contrast to Germany's pro-austerity stance for solving the crisis, he said.

If the eurozone decides to impose expansionary rather than austerity policies, the European Central Bank will implement quantitative easing, which will drive up inflation elsewhere in the world, he said.

An expansionary financial policy could help Taiwan's exports to the eurozone but would also put inflationary pressure on the country, he noted.

Taiwan Research Institute President Wu Tsai-yi said that if Hollande wins, the key to resolving the European debt crisis will lie in whether France and Germany can reach an agreement on how to deal with the issue.

(By Maranda Hsu, Huang Chiao-wen and Ann Chen)
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