Warning on European investments if France says “Non”

When France votes next week to accept or reject the European Constitution, the outcome could have wide ranging effects on European economics.

In the event that the French reject the constitution, experts believe that there would be negative fallout for the euro, for eurozone equities and bonds, and even for Turkish assets.

72 percent of fund managers who specialize in European economic issues, who were polled by Merrill Lynch, felt that a “no” vote by France on the constitution would be harmful to the Turkish economy.

While they have not yet begun formal talks in pursuit of membership, Turkey wants to become part of the European Union.

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.

Additionally, the poll found that 73 percent of the managers believe that a “no” vote by France will hurt the euro, while only 2 percent think a “no” will be positive news for the currency.

Forty-eight percent of those polled saw negative fallout for eurozone equities with a “no” vote, and 56 percent think that the prices of eurozone bonds would fall if the French turn the constitution down.

Much smaller percentages of those polled felt that a “no” vote would have a positive effect.

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