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Sighs of relief: five managers on Macron's landslide win

Asset allocators exhale as liberal centrist Macron roundly beats his far right rival Marine Le Pen

President Macron

Emmanuel Macron beat Marine Le Pen by a margin of 66.1% to 33.9% in yesterday's election to become the country's youngest-ever President.

The widely-anticipated landslide was widely factored in two weeks ago, after the liberal candidate comfortably won the first round of the presidential elections. The relief was broad enough to take the euro to a six month high against the dollar, however.

With Le Pen no longer an imminent threat to European unity and eurozone integrity, investors can now focus on the future without the fear of political calamity hovering over their decisions.

We garner the views of five investment managers.

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President Macron

Emmanuel Macron beat Marine Le Pen by a margin of 66.1% to 33.9% in yesterday's election to become the country's youngest-ever President.

The widely-anticipated landslide was widely factored in two weeks ago, after the liberal candidate comfortably won the first round of the presidential elections. The relief was broad enough to take the euro to a six month high against the dollar, however.

With Le Pen no longer an imminent threat to European unity and eurozone integrity, investors can now focus on the future without the fear of political calamity hovering over their decisions.

We garner the views of five investment managers.

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Trevor Greetham, head of multi-asset, RLAM

'Macron's first challenge is to attract political backing, to form a government that allows him to implement the reforms France needs, in order to bring down unemployment and solidify support for the European project. However, June's parliamentary elections don't carry the same near-term risks for financial markets as the presidential election.

'Challenges remain during the volatile summer months, with stock prices likely to dip on heightened geopolitical stress or signs that global growth is coming off the boil. We have lightened up our equity exposure in the multi asset funds we manage, with a view to buying back at lower prices, if markets do dip. Longer term, we see a continuation of the positive backdrop of recent years, with loose monetary policy and steady growth driving stock prices higher.'

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David Moss, head of European equities, BMO

'While investors still need to see in full Macron's policy aims and whether his new party can gain sufficient seats to fulfil his agenda, French economic performance under Hollande has been lacklustre and we can now begin to look forward with more confidence.

'The backdrop from European equities has been improving for some time as economic growth improves across the region and both consumers and businesses become more confident and willing to spend and invest. With attractive valuations relative to other markets, especially the US, the issue restraining European markets and global investors from increasing allocations has been political. Tonight’s result removes the majority of the restraints we have seen.'

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Jaisal Pastakia, investment manager, Heartwood IM

'Is it the end of populism in Europe? Not necessarily. Populist parties are still gaining a meaningful share of the popular vote – whether in France, the Netherlands or Italy - and this has been sufficient in getting their voice heard and sway policy.

'For now, though, global investors will be reassured that the risk of an anti-establishment candidate taking charge of Europe’s second largest economy has been removed. This may attract further investment flows in European equities. We have had a long standing overweight in the market on the basis of improving macroeconomic fundamentals and corporate earnings recovery, and we maintain this overweight.'

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Darren Ruane, head of fixed interest, Investec Wealth & Investment

'The next focus will be on the Assembly elections, which take place on 11th and 18th June, where the challenge will be in converting the decisive election win into Assembly seats given the youth of Macron’s En Marche! political party.

'Given that Macron’s election win was fully expected by markets, early price movements show a small degree of profit-taking. European equities are lower by 0.3%, the euro has weakened against the dollar and French government bond yields are underperforming their German counterparts.'

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Adrien Pichoud, chief economist, SYZ Asset Management

'Investors can now turn their attention to the economic fundamentals of European financial assets. And in a context of positive but moderate worldwide growth, the eurozone is showing a positive dynamic linked to the fact that it is still in the middle of the growth cycle begun in 2013.

'In the 1st quarter of 2017, the Eurozone’s GDP growth exceeded that of the US, as was the case for 2016 as a whole. Deflationary fears are dissipating and this is fuelling a debate over a gradual phasing out of the ultra-accommodating monetary policies put in place by the ECB over the past few years. Under these circumstances, the coming months should witness significant movements on the financial markets, even though the immediate impact of the election of Mr. Macron is expected to be limited, given the extent to which the markets had already anticipated this outcome pursuant to the first round.'

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