Melenchon surge adds new drama to French election race

France's presidential election race has been shaken up by the late surge of leftist Jean-Luc Melenchon into third place in several polls, closing the gap on what had been thought a two-horse race.

The shift in the balance of support was made clear over the weekend, with Communist-backed Melenchon racing up from nowhere thanks to strong performances in two televised debates.

A Kantar Sofres Poll from the weekend showed Emmanuel Macron and Marin Le Pen tied at 24% in the first round but with Melenchon enjoying his support soar to 18% and putting him 1% ahead of embattled François Fillon. Left Front candidate Melenchon’s support was only around 6% in mid-March.

An average of the four different polling companies put Macron and Le Pen both on 23.6%, Fillon on 18.4% and Melenchon on 18%.

"While there is still a gap to the top two candidates in the first round it’s worth seeing if the positive momentum for Melenchon continues and whether the gap gets closed at all," said Deutsche Bank strategist Jim Reid.

An unusual electoral race where surprises remain possible

Forecasting the two-stage election has been made even more difficult than usual, political analysts have said, due to an unusually high number of voters saying they plan to abstain or remain undecided.

Up to 40% of voters are undecided, with only two weeks to go before the first round of voting, with pacesetter Macron’s certainty of choice increasing recently but still tracking below that of other contenders.

Based on current surveys, analysis by Rabobank suggested that following the election on 23 April, there were six potential scenarios for the second round run-off between the top two candidates expected on 7 May.

In three of them Macron would have a reasonably comfortable lead against any of the other candidates, while either Fillon or Melanchon would be likely to edge out Le Pen, while the final scenario would see Melenchon well ahead of Fillon.

"Things become far more interesting if Melenchon was to reach the second round, with him predicted to comfortably beat Fillon and currently only trail Macron by 6% (and of course beat Le Pen)," analysts at Rabobank said.

"Melenchon is not a candidate who will be viewed in a favourable manner by the market given the left wing nature of his economic policies."

In 2012, Mélenchon witnessed a similar surge in the polls at about the same period in the election race, but ultimately the support did not materialise in the final results of the presidential election.

Le Pen risks remain

Rabobank said the six scenarios reinforced the message that "if Le Pen does make it through to the second round she is unlikely to triumph" - although the bank noted that versus both Fillon and Melenchon the margin is relatively tight at 10% and 14% respectively especially given the recent theme of polls failing to adequately gauge populist support.

Deutsche Bank calculated three 'stress-test' scenarios to gauge the level of participation rates and expressed votes that would be required to lead to Le Pen winning the second round of the election.

Using voter intention surveys from earlier in April, economist Marc de-Muizon examined scenarios where Macron’s support does not fully materialize or undecided voters switch to Le Pen and found all three would significantly raise the risk of a Le Pen victory.

One scenario assumed Macron and Le Pen meet in the second round, with half of Fillon's and Melenchon's first-round voters turning up to vote for Le Pen, boosting her second round score from 25% of the electorate to 29%. "In such a scenario, if less than 60% of the electorate expresses a vote, the risks of Le Pen victory would be material."

Citi on Monday put a 35% probability on a Macron win, with Fillon the most likely alternative scenario at 30% and the probability of a Le Pen win upped to 25% but still "quite unlikely".

June's legislative elections will remain key, as even if Macron wins it is unlikely his En Marche! movement will have an outright majority in the 577-seat lower house, with the support of some of the reformist part of the Socialist Party needed to make a governing coalition.