European investments threatened by possible French “No” to constituion

If France votes next week to reject the European Constitution, experts expect that there will be a negative effect on the euro, eurozone equities and bonds, as well as on Turkish assets.

A poll of fund managers conducted by Merrill Lynch found that 73 percent of the managers who specialize in European financial affairs polled believe that a “no” vote will hurt the euro.

Only 2 percent feel that such a vote will be positive news for the currency.

48 percent of those polled saw negative fallout for eurozone equities in the event of a French “no” vote on the constitution, and 56 percent think that the prices of eurozone bonds would fall if the French turn the constitution down.

72 percent saw a “no” vote by France as a detriment to Turkish assets as well. Turkey wants to become part of the European Union but has not yet begun formal talks on membership.

An analyst with Merrill Lynch said that a “no” vote by France would stifle enthusiasm for expanding the EU. If the Dutch also vote “no” on the constitution, according to Merrill Lynch, the effect of a French “no” vote would only be amplified.

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