Until a short while ago, London real estate was the safe haven of choice for foreign investors fleeing uncertainty in their own countries.
It looks like Paris now is becoming a safe haven for British investors worried about the negative consequences of the vote to leave the European Union. A report in the French newspaper Les Echos says the British are currently the second-largest group of investors in Paris property, making up 10% of total transactions involving foreign investors, just behind the Italians, who make up 17%.
In just a month, things have changed dramatically. From the most dangerous city for the future of the EU, Paris turned into one of the most desirable locations for investment. Indeed, it looks like the whole French economy could become quite an attractive destination for investors.
New President Emmanuel Macron seems to have passed his first international tests with a good presence at a meeting of the G7 and a successful meeting with Russian President Vladimir Putin. He enjoys domestic approval, too, with 65% of the French saying they are "satisfied" with the way he carries out his presidential role, according to a recent opinion poll.
The Ipsos/Sopra Steria poll also shows Macron's political party, La République en Marche, topping voters' preferences for the first round of the parliamentary elections, which will take place on June 11. With 29.5% of respondents expressing their intention to vote for Macron's party, the party would be far from being able to govern alone. However, such a percentage could give Macron enough parliamentary firepower to push through promised reforms.
If enacted, these reforms could provide a boost to the sclerotic French economy. Macron plans to cut France's corporate tax to 25% from the current 33.3%, to bring France closer to the EU average, and to invest 50 billion euros ($56 billion) in various workforce training programs, in the digital revolution and in modernizing public services.
Macron's party also plans to cut social security tax charged on employers by around six percentage points and to encourage the creation of more permanent jobs by taxing companies that create full-time positions less than those that prefer to employ people on temporary contracts.
It also plans to bring contract negotiations between workers and employers down to company or branch level from the centralized level that is dominating such negotiations now, making work less bureaucratic. It also wants to create a fund for industry and innovation, financed by 10 billion euros that will come from raising capital from companies in which the state owns minority shares.
Betting on domestically oriented French companies and on French corporate bonds could be a good way for investors to get exposure to the growth that could be unleashed by these reforms.
However, one caveat regarding corporate bonds is that the European Central Bank's asset purchases are unlikely to be ramped up; indeed, they probably will be tapered, so there will be no monetary policy uplift there. Therefore, French stocks probably remain the best way to gain exposure.
For equity strategists at Societe Generale, the CAC Mid 60 index of domestically and Europe-oriented companies is a good short-term trade, as well as stock-picking in small and midsize French companies. This strategy is best suited for investors who already have brokerage accounts that offer access to Paris-listed stocks.
For the medium to long term, the strategists recommend, among other strategies, buying eurozone banks. U.S.-based investors can achieve this via ETFs such as the iShares MSCI Europe Financials (EUFN) . Investors looking for general exposure to an improving eurozone also could look to the iShares MSCI Eurozone ETF (EZU) , an ETF that is in the Action Alerts PLUS charity portfolio that Jim Cramer co-manages.