An exchange traded fund that invests in France fell about 7% on Wednesday in U.S. trading amid speculation the country may lose its triple-A credit rating and talk that Societe Generale was in trouble.
However, the three major credit ratings agencies affirmed France’s credit rating, Voice of America reported.
Separately, SocGen’s chief executive in a CNBC telephone interview said the rumors swirling around the company were unfounded as the stock plunged Wednesday.
Investors are worried Europe’s debt crisis is now spreading to France, the EU’s second-largest economy.
Downgrade rumors on French debt, another Greece bailout and now a potential French government bailout of Societe Generale pushed French stocks lower, reported Christina Plumb for Reuters. Almost $14.2 billion in market value disappeared between the top three French banks. SocGen plummeted as much as 23% during trading and closed down 15%. [France ETF Tumbles with Banks.]
“The rumors on the French triple-A rating are having a catastrophic impact, despite the denial from credit agencies,” commented Christian Jimenez, fund manager and president of Diamant Bleu Gestion. “Shorts are on a rampage; it’s a calamity. This has nothing to do with fundamentals.”
Nevertheless, skittish investors burned by the 2008 credit crisis are selling first, and asking questions later.
“You’ve already had situations in Greece, Spain has been in there, Portugal, and now if you are talking about France, which because it’s a bigger economy, it probably generates more concern on a comparison basis,” remarked Gordon Charlop, managing director of Rosenblatt Securities, reports Chuck Mikolajczak for Reuters.
iShares MSCI France (NYSEArca: EWQ)
Max Chen contributed to his article.