Tuesday, 7 October 2025 Reading time : 3 minutes

Europe's second-largest economy is in turmoil: on Monday, French Prime Minister Sébastien Lecornu resigned after just one month in office. President Emmanuel Macron has now tasked the Prime Minister with finding a way out of the political crisis after all. Negotiations are set to continue until Wednesday evening.

With Lecornu, Macron would be losing the third prime minister. Since the snap elections in summer 2024, the French parliament has been extremely fragmented, making it difficult to form a stable government.

To overcome the deadlock, the call for new elections is once again growing. However, it is questionable whether this would shift the allocation of seats enough to make it easier to form a majority.

The French stock market reacted to the news from the Élysée Palace with losses. The leading index, the Cac 40, fell by around 1.3% on Monday. But even prior to the latest political escalation, the French stock market has underperformed compared to other European stock exchanges over the course of the year. The Cac 40 has gained 14.4% since the beginning of the year (as of 3 October 2025, including dividends), lagging behind the stock markets in Frankfurt (Dax: +22.5%), Milan (FTSE Mib: +31.7%) and Madrid (Ibex: +37.9%).

For investors who believe that French equities will see moderate price gains, but who do not want to take the risk of a direct investment, a barrier reverse convertible could be an option. With Axa, LVMH, Saint-Gobain and Sanofi, the current subscription product combines four major players from four different sectors (finance, consumer cyclicals, industrials and healthcare). All stocks are rated 'overweight' by the research of Zürcher Kantonalbank.

Barrier Reverse Convertibles on French Equities

qCHF
11.10% p.a. BRC auf Axa, LVMH, Saint-Gobain, Sanofi
Barrier: 65.50%
Valor: 149 281 086

EUR
12.65% p.a. BRC on Axa, LVMH, Saint-Gobain, Sanofi
Barrier: 65%
Valor: 149 281 084

Indicative terms

 

Disclaimer
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