The Paris Bourse is expected to earn 1.6% on 2010
The good performance results of listed companies should trump concerns over the sovereign debt of the euro area and allow the CAC 40 index gaining about 1.6% throughout this year, shows a Reuters poll after the losses in the first half.
The benchmark index of the Paris Stock Exchange should close the year at 4000 points against 3939 end 2009, representing an increase of 9.8% from the close of Wednesday to 3642, according to the median estimates collected from 28 analysts and managers.
They have therefore been revised downwards from the level of 4,200 points set by the March survey.
The professionals see the ACC achieve 4200 points in mid-2011, 15% above their closing Wednesday.
Since 1 January, the CAC 40 fell 7.48%, partly due to concerns about the debt of states in the euro zone, whose magnitude is considered a threat to economic recovery.
"The financial situation of companies could target higher but it is true that the economy would suffer from too heavy indebtedness of some countries," said Christian Jimenez, a fund manager and president of Blue Diamond, which sees the CAC 40 4,000 points at the end of December and 4,200 in a year.
After a mixed first quarter, the CAC 40 was on a downward trend in mid-April, hit by fears of a spreading crisis of the Greek debt to other countries like Spain and Portugal.These concerns have also knocked the euro to its lowest level in four years against the dollar.
CONTRARY WINDS
The benchmark index in Paris has plunged nearly 20% in less than two months, as many stock markets around the world.But it has taken over the past two weeks, erasing some of its losses thanks to the relative calm fears about the debt and purchasing cheap stock whose valuation ratios had fallen to their lowest level for over a year.
Analysts and managers also consider the depreciation of the euro as a positive development for French firms, including of course those who make a significant portion of their sales outside the euro area.
But many professionals like to recall that all the headwinds blowing on the Paris Bourse are not appeased.
"There are negative surprises waiting on corporate earnings in an environment of austerity plans for economic growth and very low in the euro area," explains Philippe-Henri Burlisson, director of fundamental managements at Groupama Asset Management.
"Today the consensus forecast 20% increase in EPS in 2011 compared to 2010.This does not seem tenable and will be revised downward, which will result in falling stock markets. "
He added that the possibility of an increase in corporation tax in the context of measures of fiscal consolidation is a threat to businesses focused on the French market.
"The areas most at risk are those related to domestic consumption and those whose production facilities are relocated to escape under a higher tax burden," he adds.
Philip Henry sees Burlisson ACC 40-3400 points at the end of 3500 and mid-2011.