European Growth & Investment Opportunities Discussion at Paris EUROPLACE International Financial Forum in New York

The event was hosted by Mr. Arnaud de BRESSON, Chief Executive Officer, Paris EUROPLACE, and featured remarks from Governor Christian NOYER, Banque de France, and Mr. Ramon FERNANDEZ, Director General of the Treasury, France Ministry for Finance and Public Accounts - Ministry for the Economy, Industrial Renewal and the Digital Sector, who both addressed the improving economy, financial sector and macroeconomic growth - and accompany risk factors - in France and European markets. More than 400 delegates including institutional investors, corporate issuers, bankers and insurers discussed economic conditions in Europe as well as regulatory dialog between the United States and Europe.

Governor Christian NOYER, Banque de France, addressed the restoration of growth in the Eurozone, and France in particular. “Our growth is expected to be close to the euro area average in 2014, at around 1%,” he said, noting France’s major strengths in the global economy, namely “dynamic demographics, a well-trained labor force, expertise in strategic sectors such as mathematics, aeronautics and nuclear engineering, and excellent infrastructure.” Gov. NOYER also reported on European Central Bank projections that annual real GDP growth in 2015 will reach 1.5%.

Gov. NOYER did note that low inflation that continues in Europe, while providing economic stimulus by boosting real income, does carry significant dangers and risk: “First, it makes real adjustment more complicated. Second, low inflation makes it difficult to attain low, or negative, real interest rates, which are necessary in all advanced economies and the current juncture. Finally, low inflation increases the risk that the economy could fall into outright deflation if and when it is hit by a negative shock. The 2% [inflation] target is meant to act as a cushion against that risk.”

Mr. Ramon FERNANDEZ, France Ministry of Economy and Finance, also stressed growth and a growing credit facility: “Without doubt, the most positive news over the past couple of months has been the euro area’s return to growth, a clear testament to the fact that our strategy is bearing its fruits. With banks in firmer shape to help finance investment, we should begin to see a turnaround in the credit cycle also.” While acknowledging the recovery appears to be weak, growth nonetheless is firming and stabilizing, thanks largely to various reforms and initiatives undertaken by the European Banking Union, a more “accommodative policy-mix” within the European Union, fiscal and budgetary reforms and control of public spending, and a critical role for monetary policy guided by the European Central Bank.

Speaking of France, Mr. FERNANDEZ said, “After reaching 4.3% of GDP in 2013, the public deficit should be further reduced, thanks to €18 billion in measures included in the Budget Bill for 2014, out of which €15 billion will come from expenditure cuts. In addition to public finances consolidation, the French Government has committed to implementing an ambitious and coherent set of reforms, aimed at increasing potential growth through different measures in favor of French business competitiveness and employment.”

In opening remarks, Mr. Arnaud de BRESSON, Chief Executive Officer, Paris EUROPLACE, stressed that macroeconomic and financial reforms have solidified growth and opportunity in France and Europe. “After five challenging years since the financial crisis, structural reforms are well engaged in Europe as well as in the US,” he said. “Accordingly economic growth is on the way and international investment is coming back to Europe and Paris. Let me underline the major achievements that will support Europe sustainable growth. First, substantial improvements in public finances are strongly engaged, and the France Finance Minister confirmed this past weekend that France will return to a budget deficit of less than 3% GDP by 2015. At the same time, Gov. NOYER insists that we still must provide economic stimulus.”

Mr. de BRESSON identified strong investment opportunities in equity markets - stating one in four companies listed on the CAC 40 index is undervalued - the rise of initial public offerings in Europe (280 in 2013) and Paris itself (30). He also noted strength in bond markets in Europe, where Paris is the largest issuer of corporate bonds and has a 20%-share of the booming high-yield market there. “The private equity industry also offers great opportunities with the development of young innovative companies in high-tech sectors, media and communication, health and bioscience, as well as the financial sector,” he said. “Concerning investors, I remind you that Paris benefits by being second in the world in the asset management industry, with more than €3 trillion of assets under management in 2013.”

Beyond the keynotes, the Paris EUROPLACE Forum included roundtables on Eurozone growth, capital markets, the release of the Banque de France Financial Stability Review, and regulatory and policy convergence between the United States and Europe, which included the perspectives of financial, business and regulatory leaders from both sides of the Atlantic and Asia. Additional sessions addressed investment opportunities in European peripherals, European fixed-income cash markets, and Big Data concerns in both financial and insurance sectors.