PARIS JP Morgan equity strategists on Tuesday said they still expected independent centrist Emmanuel Macron to win the French presidential election, even though they noted the race had tightened after a rise in polls for far-left candidate Jean-Luc Melenchon.
JP Morgan shared the view of other top investment banks by stating that the key negative risk for financial markets was the possibility Melenchon could face far-right, National Front leader Marine Le Pen in the May 7 decisive, second-round vote.
"Should Melenchon and Le Pen both enter the second round, euro zone equities would likely pull back sharply," JP Morgan's team wrote in a note.
"While the likelihood of this outcome has risen, we still believe the base-case scenario should be the second round contest between Macron and Le Pen, with Macron ultimately prevailing," they added.
"If that comes to pass, then the significant outflows from the region over the past year, which we estimate amount to 10-15 percent of assets under management, would likely be reversed," JP Morgan also said.
(Reporting by Sudip Kar-Gupta; Editing by Mathieu Rosemain)