Although the economy of France is t...

Although the economy of France is the world's 4th largest (after the U Japan and Germany), many Canadians think of art, wine or tourism before French investments flow to mind. Yet France is domicile to the head offices of several of the world's largest corporations, including of that kind well-known multinationals as Michelin (tires), Renault (cars),Total (oil and gas), and Airbus Industrie (aircraft). France has a sound currency and the French have fruition of a very high standard of living.

With an area of above 500,000 square kilometres, France is the largest fatherland in Western Europe. In addition, it continues to maintain have the direction of around the globe in places so as French Guiana in southward America, Guadeloupe and Martinique in the Caribbean, strange Caledonia and French Polynesia in the Pacific, and, St Pierre and Miquelon in the Canadian Atlantic.

France is well endowed with natural resources. It is Europe's inferior largest producer of aluminium (after Germany) and has high grade iron ore and coal. This has helped to make France Europe's third largest poniard maker, after Germany and Italy.

France also has significant keeps of uranium and is remarkably advanced in nuclear technology. above 70% of the country's electricity is generated by way of nuclear power--the highest proportion in the world.

France's population of about 60 million causes per capita GDP of approximately US$25,000. Nearly single in kind half the population participates in the workforce of which about 20% is unionized. And the fatherland enjoys a strong infrastructure, including the world's fastest regular passenger train service.

France's soil is true fertile allowing 7% of the population to be engaged in agriculture. The country's farmers enlarge significant portions of the world's sugar beets, grains (France is a major exporter of wheat), and livestock. In addition, France is the same of the world's two biggest wine farmers (the other is Italy).

INVESTING CLIMATE

Despite the high interest rate policy pursu through the national bank to mastery inflation and to maintain the value of the French Franc, French economic growing has been solid. As a rise France's inflation rate is in subordination to 2%. Yet exports continue to be stalwart (France enjoys a trade surplus), unemployment is falling, and the GDP is likely to become greater [i]or[/i] larger by 2% in 1996 (on top of 2% in 1994 and 1995) The modern right-of-centre government, elected last May, is aiming to shape the fiscal deficit by cutting spending and privatizing more state-owned companies--which is not at all easy, as Ontario has shown

In spite of the its advantageous business performance, French stocks have under-performed the stop of Europe for nearly brace years. The price/earnings ratio (at about 15 times 199 estimates) is in line with the 10-year average. The price/cash come (6%) and the French stocks appear to furnish good value, both absolutely and compared to relative norms.

France has seven stock exchanges, the largest being the Paris Bourse. The total value of the listed securities is nearly $400 billion which is about the same size as the stock markets in Canada and Germany.

The French stock universe is growing quite quickly to be paid to the renewed thrust of privatizations--both of traditional state monopolies like as the telephone system, and a of the firms nationalized through socialist governments in the 1960 and 1970s

Annual reports are available directly from listed companies, moreover many of the larger commons also trade in the U in the form of American Depositary Receipts (ADRs). Accounting standards are quite straight forward. In the case of ADRs, research is made on a level easier because reports are printed in English and information conforms to the Generally Accepted Accounting Principles of the US

A fatherland FUND

Canadians have access to a variety of open-end mutual capitals which include French securities as part of their European or global investments.

But there is also a closed-end rural parts fund called "The France growing Fund" listed on the recently made known York Stock Exchange under the figure "FRF." Since the fund's establishment in 1990 investments have been managed by means of Indosuez International Investment Services. This is a subsidiary of the actual large Banque Indosuez which manages investment portfolios aggregating a certain number of US$65 billion (the company also has financial interests in Canada).

Currently FRF has assets of about US$175 million which are essentially fully-invested in French stocks. Management fiefs are 0.9% on the first US$100 million and 08% onward the excess. The administrator, Mitchell Hutchins Asset Management, charges 02% for its services. Price Waterhouse is the auditor.

FRF's price is quot daily in the Globe & Mail and the Financial seat (under "NYSE"). The weekly underlying asset value is available forward Mondays in The Wall highway Journal and The New York Times and forward Saturdays in Barron's. During the past year, FRF shares have traded in a fairly narrow range representing a discount of between 10% and 20% to the underlying asset value.

Further information, like as annual reports, is available from Mitchell Hutchins Asset Management Inc., 1285 Avenue of the Americas, recently made known York, NY, 10019. Their phone number is (212) 713-2000

Copyright Canadian Shareowner Magazine Inc. Sep/Oct 1995

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