BlackRock Says French Equities Are ‘Attractively Priced’

BlackRock's Tom Becker said the CAC has underperformed over the last 1, 3 years and viewed the index as cyclically exposed, but argued there may be a floor given its large energy producer weighting. The commentary is constructive but cautious on euro-zone equities, especially France, and does not cite any immediate catalysts. Market impact is likely limited to sentiment around European equity positioning.

Analysis

The more important signal here is not a broad bullish call on Europe, but that cyclicals with embedded commodity leverage are starting to look statistically washed out after a multi-year relative drawdown. If French equities are stabilizing from a depressed base, the first beneficiaries are likely not the domestic banks or defensives, but global revenue generators inside the index that can re-rate on improving risk appetite without needing a macro regime change. That makes the trade less about France-specific politics and more about mean reversion in positioning.

The second-order effect is that a ‘bottom’ in a cyclically exposed index often leads to an outsized rebound in the names most shorted for recession or margin-reset exposure. Energy and industrial exporters should outperform local consumer-facing and rate-sensitive businesses because they can absorb slower domestic growth while benefiting from any improvement in European manufacturing PMIs or global inventory restocking. If this view is right, the more levered expression is through baskets and sector pairs rather than a broad market long.

The key risk is that a technical bottom can fail if credit conditions or policy uncertainty worsen, which would hit France disproportionately versus the broader euro zone. Over the next 1-3 months, watch for earnings revisions, PMIs, and sovereign spread volatility; over 6-12 months, the trade hinges on whether the market starts paying for cyclical optionality again or keeps rewarding balance-sheet quality. A reversal likely comes from a sharper downturn in global growth or a renewed widening in French risk premia that overwhelms the valuation argument.

Key Decisions for Investors

• Go long a euro-zone cyclical basket vs a European defensives basket for 1-3 months; use this as a cleaner expression of a re-rating in cyclicals with less country-political noise. Risk/reward: limited downside if the bottoming thesis is early, upside expands materially if PMI momentum improves.
• Pair trade: long European energy exposure / short France domestic consumers for 2-4 months. The former should capture any rebound in risk appetite and commodity linkage; the latter is more vulnerable if the move is only a technical bounce.
• Buy upside on a France equity proxy through call spreads rather than outright equity for the next earnings cycle. This keeps theta controlled if the ‘bottom’ takes longer to form while preserving convexity if short covering drives a fast rebound.
• If you want direct index exposure, wait for a failed retest and then add on weakness rather than chasing strength. A successful retest of prior lows would improve the probability that the multi-year underperformance has become a durable base.