The French economy may be humbled for a while, and while it has nothing to do with Michael Phelps or the 400-meter swim relay, the French-related exchange traded funds (ETFs) will someday see the brighter side of things – just not today.

But first, iShares MSCI France (EWQ) has a number of things working in its favor, says Carl Delfeld for ETF XRay. President Sarkozy started off on the wrong foot, but he seems to have recently regained some momentum.

His “modernization of the economy” law should help ramp up retail and entrepreneurial competition, because it slashes red tape and will increase competition. Unemployed people who refuse more than two job offers will be penalized. Cargo handling is being shifted to the private sector, and the retirement age is being raised by a year.

Overall, these policy changes signal that France is working hard to move onward and upward. Delfeld cautions investors not to expect a near-term pop, but good things could be happening down the line for Europe’s second-largest economy.

Industrial production is 15% of France’s economy, and it experienced an unexpected drop in June. Output from factories and utilities decreased 0.4% from May, when it had dropped 2.9%. While the euro is stronger, rising energy costs are offsetting gains, and the U.S. slowdown has put a pinch on expansion, reports Helene Fouquet and Sandrine Rastell for Bloomberg.

NETS CAC 40 Index France (FRC) is another option when the signs show a turnaround. EWQ is down 17.6% year-to-date, but is up 3.3% in the last moth. FRC launched on April 16, and is down 10.3% since then.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.