Investors are more excited about Macron than Trump at this stage in his presidency

New kid on the block.
New kid on the block.
Image: Reuters/Jonathan Ernst
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Financial markets have a new hero. France’s 39-year-old president, Emmanuel Macron, has charmed his peers on the world stage and taken investors under his spell too.

In the days since Macron won the first round of the French presidential election, the country’s index of small-cap company shares has surged by 17%. When it comes to smaller companies, which are more sensitive to local economic conditions, Macron’s rally is outpacing the one that followed Donald Trump’s victory in the US, which was boosted by promises of tax reform, infrastructure spending, cuts to regulation, and protectionist measures.

France’s small-cap stock index hit a new record high this week as investors bet that Macron and his new parliamentary majority would succeed in pushing through overdue economic reforms in France. Small-cap stocks are used as a gauge of investor sentiment for a country’s domestic economy, since most of the companies in the index operate primarily in their home nation, by comparison to large-cap stock indexes, which feature companies that generate lot of their revenues from abroad.