Last year’s Brexit vote and U.S. presidential election produced surprising outcomes.

Could it happen again on May 7 in the final round of the French presidential election? Just days before French voters cast their ballots; centrist frontrunner Emmanuel Macron holds a commanding double-digit lead in the polls over far-right candidate Marine Le Pen.

But as we saw last June ahead of the Brexit vote, spread-betting providers said there was a 70% chance of the UK staying in the European Union (EU).1 Five months later, betting odds for a Trump victory were around 5-to-1 on election night.2

This weekend, investors around the world are keeping a close eye on the French presidential contest, which pits Macron’s traditionalist, market-friendly positions against Le Pen’s anti-EU policies.

To learn more about what’s at stake for France, the European Union and the future of populism in Europe, we spoke with Turgut Kisinbay, OppenheimerFunds’ Director of Fixed Income Research in the most recent episode of the OppenheimerFunds World Financial Podcast. Kisinbay traveled to France earlier this year and met with local analysts, journalists and industry experts to get a first-hand look at the nation’s political and economic landscape.

During our conversation, he explained why he thinks a Le Pen victory is unlikely, and pointed out some notable differences between the French presidential contest and last year’s votes in the U.S. and UK.

With “the Brexit referendum and the U.S. election, the polls were suggesting very tight races, so what happened was within the margin of error,” he said. “In the case of the French election though, a 15%-20% gap between the two candidates is really large, so we really have to have a very unexpected turn of events for Le Pen to win.”

As of May 4, Macron led Le Pen 59.8% to 40.2% according to an Elabe poll.

Kisinbay stopped short of guaranteeing a Macron win, but he pointed out that polls for the first round of the election accurately predicted how the four presidential candidates would finish that stage of the race.

Macron’s victory was widely viewed as market-friendly, he noted, and that the outcome for the race would have been even more beneficial for markets if a center-right candidate was also in the mix for the French presidency.

“He’s a centrist candidate. Formerly Socialist Party but seen as a reformist – a new face to French politics,” Kisinbay noted. As for Le Pen, he said: “She is not representing the European mainstream … In many ways her policies are anti-EU, and she represents a major change from what we are used to.”

What the Outcome Could Mean for French Economic Policy

In Kisinbay’s view, both Macron and Le Pen would have difficulties in piecing together a majority in parliament, which is necessary for the French president to push their agenda forward. But because Macron is a centrist, he’ll likely have an easier path towards assembling a coalition than Le Pen, which will enable him to get at least some of his agenda passed into law.

In the event of a Le Pen victory, Kisinbay said France will likely wind up with what’s known as cohabitation, where the president and parliamentary majority form different parties.

“In that scenario, it’s very difficult to pass laws, let alone something very radical like leaving the EU,” Kisinbay said. “If she wins the election – not likely – it will be difficult for her to govern. But of course the headline and market reaction will be interesting.”

Although investors who are following the election may be feeling a bit of déjà vu, Kisinbay said there are some key differences between the UK’s push to leave the EU and the current political environment in France.

“The UK was different because it was always a reluctant participant in the EU project,” he said. “There are polls about Brexit going back 30, 40 years … The UK was, in that sense, a bit of an outlier. It was always a bit of a skeptic.”

The Future of Populism in Europe

Although there has been a rise in nationalism and protectionist views in Europe in the aftermath of the global financial crisis, Kisinbay said polls suggest anti-EU parties are on the downswing across Europe. “If you recall the elections in the last year, in the Netherlands we got good results – mainstream parties won,” he said. “In Austria, same result. So after Brexit, we really didn’t get bad news from the European elections.”

Once the French elections are settled, attention will turn to Germany, which holds its Federal election this fall. But Kisinbay said the type of anti-EU, anti-establishment movements that have caught fire in the UK and France aren’t a major factor in the German electoral landscape.

Given the current trends in European politics, Kisinbay says he does not envision a full integration of European economies over the next 50 years. What’s more likely, he said, is an integrated banking system where fiscal costs can be shared between countries in the case of market failures.

Time to Invest in Europe?

During the podcast, Kisinbay said he favors European credit, which in his view, will become even more attractive once France’s presidential race is settled.

“What’s exciting about the European economy is I think it’s been very resilient in the last few years despite Brexit and other political concerns,” he added. “It’s delivering around 1.5%-2% growth, and they’ve actually been catching up with the U.S. the last couple of quarters.”

He continued: “It is an under-owned continent and an improving story, so we think, in our space, buying credit in Europe has been very interesting and exciting and we have maintained that position for a while.”

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1 Source: CNBC

2 Source: Fortune