Brexit and Italian populists for a second. It’s
worth paying attention to what’s going on in France.
more than two weeks, the country has been disrupted by an unusual
protest: the so-called “Gilets Jaunes” or “Yellow Vests.”
France is used to labor unrest and chaos affecting transport of
course, with strikes something of a national pastime.
this time it’s different.
100,000 people blocking toll roads, petrol stations and crossroads is
creating major disruption to transport and retail. It’s also
proving to be extremely tricky to defuse, as there’s no single
protest leader to negotiate with.
investors, the question is whether it could derail the outperformance
of French equities in 2018. One thing is clear. These protests are a
real threat to the country’s retailers, including Carrefour and
Casino, which are already busy battling a price war and trying to
fend off Amazon.com's efforts to penetrate their home market. Big-box
retailers have been hurt by the demos and blockages throughout the
country, with customers denied access to some hypermarkets and
supermarkets for entire days at a time. They recorded an average fall
in consumer-good sales of 35 percent on Nov. 17 and of 18 percent the
following Saturday, according to Nielsen data.
this is adding to the perception of shrinking purchasing power in
France, in particular among people on lower incomes. And that
“doesn’t bode well” for the year-end holiday retail season,
which needs a boost after the unseasonably hot weather of the
previous months, according to Invest Securities. In fact, consumer
confidence has been depressed since the summer, and this might be the
impact on toll roads is harder to quantify, as demonstrators have
been regularly opening them to let cars pass freely. Vinci is the
largest operator in France and although motorway concessions only
account for about 13% of its 2017 revenue, they generated more than
59 percent of its Ebitda. So brace yourself for an impact on earnings
if the unrest gains traction.
protests started on Nov. 10 with thousands of demonstrators demanding
lower gasoline prices and taxes. Demonstrators marched on Paris’s
Avenue des Champs-Elysees two weeks later, triggering social unrest.
Surprisingly, the protest is benefiting from a significant
84 percent of the French public calling it “justified,” according
to Odoxa-Dentsu poll for Le Figaro.
rioting over the weekend shows the movement is spinning out of
this movement snowballs like we’ve seen in Italy with the Five Star
Movement, Macron will have his hands full handling a crisis at home
and have less time for the matters of the euro zone. After Greece,
Brexit and Italy, this is another front that Europe didn’t need.
is something to keep in mind, although today, the market will be
focused on positive developments coming out from the G-20 meeting,
with markets rallying globally.