BofA Survey: Record 56% of Fund Managers Shun French Stocks
nashnova research
A record 56% of European fund managers plan to underweight French equities over the next 12 months, BofA's latest survey shows — fiscal slippage and election uncertainty have made France Europe's most avoided market.
How extreme is a 56% underweight reading?
BofA's survey, conducted Oct 2–8, found 56% of European regional fund managers plan to underweight France over the next 12 months — the highest on record.
This means → more than half of professional allocators are actively pulling money out of France, not just staying neutral.
France's blue-chip CAC 40 is down 3.8% year-to-date while the broader European benchmark is up 7.8% — a gap of more than 11 percentage points.
Why is capital leaving France?
Fiscal front: PM Lecornu aims to cut the deficit to 5% of GDP by 2027, but this year's target has already been missed. France's fiscal watchdog called the budget plan "overly optimistic."
Funding front: French sovereign bonds are under heavy selling pressure; borrowing costs have hit a near-25-year high. In plain terms = the government is paying more and more to borrow, shrinking its fiscal room.
Political front: polls for the 2027 presidential election point to a runoff between far-right Le Pen and far-left Mélenchon — two polar-opposite candidates, meaning the policy path is highly uncertain.
What scares fund managers most?
A net 63% of respondents named "French fiscal sustainability and the 2027 election cycle" as Europe's biggest political risk over the next 12 months.
This means → for fund managers, the France problem is no longer about valuations — it is about the country's fiscal credibility itself being marked down.
Could the risk spread beyond France?
French debt stress is already spilling over: the spread between Italian and Greek bonds versus German Bunds has widened in tandem, and the euro is falling against other currencies.
In plain terms = markets worry that France's trouble will infect southern Europe — once investors lose faith in eurozone fiscal discipline, selling rarely stops at one country.
Domestic pressure is piling on too: French students launched nationwide protests demanding €10 billion (~$11.2 bn) for overcrowded and ageing school facilities, squeezing an already strained budget further.
Is anyone betting against the crowd?
BofA strategist Raedler upgraded French equities to overweight last week, arguing the France-Germany bond spread has limited room to widen further.
That directly contradicts the survey's overwhelming pessimism — 56% of managers are cutting exposure while his own desk is calling a buy.
This reflects a classic contrarian signal: when positioning is extremely bearish, any marginal improvement can trigger a snapback. Whether French stocks can bottom at such depressed positioning is the key test for the market ahead.
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