INTRODUCTION: A wave of panic selling hit the French Bourse (stock exchange) on Monday (11 May), as a response to Francois Mitterrand's victory in the presidential election, and with a general election only weeks away.
SV INTERIOR Bourse building in Paris.
GV People coming through exterior courtyard.
TV People milling on exchange floor. (4 SHOTS)
GV Bourse worker marking price changes on board.
TV Crush of people bidding. (3 SHOTS)
TV Transactions continuing. (2 SHOTS)
TV Inner ring of brokers.
SCU Price index showing 12 1/2% and dollar exchange rate. (2 SHOTS)
On Monday (11 May), the Bank of France raised its minimum lending rate 2 1/2 percentage points to 16 percent, having lifted it by one percent only the week before. Traders were said to have startled by the size of Monday's increase. Meanwhile, foreign exchange control were reinforced at French borders, in an attempt to check the anticipated removal of vast amounts of francs to be converted into foreign currencies.
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Background: INTRODUCTION: A wave of panic selling hit the French Bourse (stock exchange) on Monday (11 May), as a response to Francois Mitterrand's victory in the presidential election, and with a general election only weeks away. Investors dumped shares in French companies, moving massively into gold shares and foreign companies. Flooded by sellers, and with almost no buyers in sight, the Bourse suspended quotations after falls averaging 10 percent in two hours' trading.
SYNOPSIS: The Bourse was to experience a frantic day, and one broker was to predict that the slide in prices was likely to continue. Bankers and investors believe the tempo of frenzied selling would become even worse if Monsieur Mitterrand's Socialists win the general election, giving him the power he needs.
Trading in gold was less frenetic that shares business. Gold gained 8.5 percent, while the franc lost two percent across the board. For the first time since the European Monetary System was forme 26 months ago, the Bank of France has to intervene to keep the franc from falling below its floor rate against the Deutschemark.
Brokers said the bulk of selling came from small investors who had accepted former President Giscard d'Estaing's campaign warning that Monsieur Mitterrand would tax their savings.