What the last month (possibly) says about UK vs France

France surprised markets with snap elections announced a month ago. The consequences will unravelled on Monday 8, July with a left-aligned hung Parliament. In sharp contrast, the UK delivered a clean no-nonsense political shift. The money has to be on the UK with a clear sense of direction while France is likely to be best avoided. 
In a way Brexit is behind us and possibly softened as Labour posts a more pragmatic political stance while France may enter into its own variation of ‘keep the foreigners at bay’ with debilitating consequences.
AlphaValue is well aware that the stocks that it covers have no singular business exposure to their home countries (and remember that an increasing number of issuers call The Netherlands home..). If the politics go wrong, the companies are not impacted by a change to their domestic business outlook but by the changing financial conditions associated with the pricing of their sovereign signatures. So the following chart has to be read in that light: France has lost a lot of its respectability/become a riskier proposition. Conversely the UK has yet to record the benefits of a stable government.

Country performances over the last month (AlphaValue coverage: 552 stocks, €14bn mkt cap)

Crossing a country perspective with a sector one is a demanding exercise when it comes to providing a readable output. Here we go after slashing the smaller countries. The % changes are computed over the last month and are equi-weighted so that the county totals are different from the market cap weighted figures in the chart above. It provides useful information.

Sectors crossed with headquarter countries: last month's performance

What are the findings?

Let's start with the UK (2024 earnings €192bn; mkt cap: €2.3tn). The kingdom was helped by its Metals & Mining strength and slowed by its Pharmas. The darker green dots in the table tend to be 1-stock situations (e.g. Rentokil, Smith & Nephew). The unfortunate Capital Goods performance was driven by Ocado ranked as such at AlphaValue. 
Moving on to France (2024 earnings €162bn; €2.5Tn mkt cap): the striking point is that all the sectors went south. The worst, Transport, is a one stock situation, indeed carrying the flag: AF-KLM. Autos sent a strong negative signal not to be found in Germany. Consumer Durables (aka Luxury) defended their turf i.e. they were not a prime vehicle to go short France. This role was naturally shouldered by the Banks.
Finally Germany (2024 earnings €139bn; €1.9Tn market cap) saved its last month thanks to its Defence and above all its large Chemicals and Capital Good sectors which navigated comparatively well.  Pharmas took a hit from the mRNA team. 
No need to point out that the above countries do not have much to offer to surf on the Nvidia hype. This is where Holland does differ.

Learn in detail about the stocks from each industry by reaching out to us on sales@alphavalue.eu