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Hollande Ministers Join French Electors in Shunning Stock Market

April 16, 2013

French President Francois Hollande

French President Francois Hollande elected 11 months ago and facing joblessness at a 15-year high, is the least popular president ever so early in his term. Photographer: Balint Porneczi/Bloomberg

When it comes to stocks, French politicians mirror the population at large: they shun them.

The 38 members of the French cabinet this week were forced to disclose their assets by President Francois Hollande, who is seeking to overcome public anger over a minister who hid an overseas bank account. The declarations reveal that while the government has as many as eight millionaires, their investments like those of their compatriots show a preference for real estate, life insurance, and savings accounts.

“They seek security, and have an aversion to risk,” said Nathalie Leaute, director of the finance department at pollster TNS Sofres, which publishes an annual survey of how the French invest their savings. “Members of the government are fairly representative of the population as a whole.”

Only 12 percent of the French own stocks or equity funds, down from 17 percent in 2010, according to a CSA poll in January 2013 that questioned 1,009 people. The poll showed that 74 percent had tax-free savings accounts, and 28 percent had life insurance contracts.

Forty-three percent said that tax-free savings accounts are the best investment, 42 percent said real estate, and only 5 percent said stocks.

In contrast, 45 percent of Americans and 43 percent of Australians are invested in equity markets, according to a 2010 study by the Australian Stock Market. The proportion stands at 18 percent for Britain and 13 percent for Germany.

‘Evil’ Capitalism

The French unease with markets was evident during the presidential election campaign last year. In a speech in January, Hollande, the Socialist Party’s candidate, said his “adversary is finance,” pledging to rein in markets.

Members of the government avoid stocks because financial markets have a bad name, said Marc Fiorentino, a partner at financial adviser Monfinancier in Paris.

“They’re afraid of the image that the stock market has with the public,” he said. “No stock market investments. Not one. As if it’s a crime. It’s as if the stock market is the manifestation of the evil of Big Capital.”

Like the French in general, property accounted for the biggest proportion on ministers’ assets.

French Prime Minister Jean-Marc Ayrault owns two houses valued at 1.2 million euros ($1.6 million). Foreign Minister Laurent Fabius has a 1.2 million-euro stake in a family business. Interior Minister Manuel Valls has artworks by his father worth 80,000 euros. Labor Minister Michel Sapin holds farmland worth 590,000 euros. Government spokeswoman Najat Vallaud-Belkacem has an Italian scooter she values at 500 euros.

Stocks Aversion

Only four members of the French government don’t own lodging.

Fifty-eight percent of the French own their home, according to state statistical institute Insee, which said 62 percent of the assets of the French are in real estate

Prime Minister Ayrault declared a net worth of about 1.5 million euros, with no equity investment.

Sapin has three houses, one apartment, various rural properties, and no equity investments.

Finance Minister Pierre Moscovici is worth just 240,000 euros, all of it in an apartment and bank accounts.

Foreign Minister Fabius has an apartment worth 2.75 million euros in Paris, a stake in a family art dealership worth 1.2 million, and just 34,000 euros in mutual funds. He had no direct investments in companies on the stock market.

The only other cabinet minister to declare assets linked to the stock market was Transport Minister Frederic Cuvillier, who said 22,000 euros of his 670,000-euro net worth in a Banque Postale mutual fund.

U.S. Comparison

In contrast, most of the members of U.S. President Barack Obama’s administration have holdings in the markets.

Secretary of State John Kerry is worth about $240 million and holds direct stakes in more than 100 companies, according to Washington D.C.-based Center for Responsive Politics.

The center estimates Treasury Secretary Jacob Lew’s assets at between $748,000 and $1.3 million, almost all of it in bond and equity mutual funds and retirement accounts. He additionally has $50,000-$100,000 in Israeli bonds.

Attorney General Eric Holder is worth at least $3.8 million, mostly in U.S. government bonds but also some mutual funds, according to the center. The $56 million in assets of Jeffrey Zients, director of The Office of Management and Budget is mostly held in a mix of equity and bond investment funds. Education Secretary Arne Duncan’s net worth of about $1.3 million, almost all in stock mutual funds.

The poorest cabinet member is Transportation Secretary Ray LaHood with a negative worth because of loans. Even he has between $31,000 and $195,000 in equity mutual funds.

Less Comfortable

“Polls have shown that French investors are much less comfortable than anglophones with stocks or any other investments seen as risky,” said Leaute at TNS-Sofres. “They don’t feel comfortable with managing risk.”

The ministers’ wealth declarations are part of a series of measures to “moralize politics” that Hollande announced after former Budget Minister Jerome Cahuzac admitted April 2 that he’d been lying for months about a secret Swiss bank account. The account was first reported last December by an online newspaper, and Cahuzac quit last month when he was placed under formal investigation.

Members of parliament will also have to announce their assets once Hollande’s measures become law. Hollande, elected 11 months ago and facing joblessness at a 15-year high, is the least popular president ever so early in his term.

The poorest member of his cabinet is women’s affairs minister and the government spokeswoman Vallaud-Belkacem, 35, with 110,000 euros, including her 500 euro Piaggio scooter.

“I’m neither proud nor ashamed,” she said yesterday in an RMC Radio interview. “It just is. We’ve all had different careers and are at different stages in our life.”

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net


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