What do riots in the streets and soaring bond yields in France have to do with profits at oil giant TotalEnergies, luxury-goods icon LVMH Moët Hennessy Louis Vuitton, tire maker Compagnie Generale des Etablissements Michelin, or pharmaceutical power Sanofi?
Not much, which is why some investors are fishing for French bargains.
French equities have been lagging behind the rest of Europe since President Emmanuel Macron lost his parliamentary majority in an ill-timed June 2024 snap election. Recent fiscal and political events have widened the gap. The Stoxx Europe 600 index has dipped 3% since a rally petered out in early August. Paris' CAC-40 is down 11%.
Bargains are hidden within this wreckage, thinks Jeffrey Germain, a director at value-focused asset manager Brandes. "We've been seeing value in France for a number of years now," he says. "We are increasing our positions gradually."
While more famous for wine and perfume, France offers a rich buffet of global industrial leaders from aviation to advertising. Most of them depend little on their domestic market.
Sanofi, whose anti-inflammatory blockbuster Dupixent raked in nearly $18 billion last year, is a good example, says George Sakoulis, head of investment teams at value investment pioneer GMO. All of Europe accounts for 20% of its sales, with 50% in the U.S. Shares are still off 8% from an August peak.
Total is another GMO pick. The company, which operates in 120 countries, trades at less than eight times earnings for the second quarter of 2026, compared with 15 for U.S.-domiciled Exxon Mobil Holdings.
Sakoulis and Germain divide on France's battered luxury-goods stocks. GMO is staying away despite flagship LVMH sinking 20% since August and more than half over the past 30 months, driven by faltering demand in China. Brandes sees a rebound spurred by "wealth expansion in other emerging markets," Germain says.
Germain also likes globally diversified Michelin after a 10% drop in its shares since August.
Even top French bank BNP Paribas reaps just a quarter of its revenue domestically, says Johann Scholtz, European bank analyst at Morningstar. Guilt by association has it valued at less than 0.9 times tangible book value, half the European average. "BNP Paribas was a top pick before the latest French political turmoil, and the selloff has only made it cheaper," he says.
French-domiciled companies might pay, literally, for their country's troubles if Paris raises their taxes to shrink its 5%-of-gross-domestic- product budget deficit. A blanket rise in corporate rates, though, looks unlikely to Jeremie Peloso, chief Europe investment strategist at BCA Research. He expects "more targeted" levies "to please the median voter," such as hiking the state's take of dividends and share buybacks.
More French turmoil looks all but inevitable in the short term, even if police can contain fresh demonstrations promised for the coming weekends. Fractious political forces will struggle to pass a budget by year's end, then shift into populist campaign mode ahead of April's presidential election.
Less predictable is whether the recent selloff in U.S. artificial-intelligence stocks continues, pushing a rotation into value offerings in France and across Europe. "I wouldn't say to buy the European dip unless you have a high conviction that AI will stumble," Peloso says.
Everything has its price, though, and civil chaos may be pushing French stocks toward theirs. "Contention provides opportunities to buy below full value," Brandes' Germain says.
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