LONDON—Escalating religious and racial tensions in France have raised risks there for investors in the final three months of 2005, according to the latest quarterly analysis from strategic risk consultancy MIG.
Attacks by Islamic extremists are a particular risk, the London-based group said in its Grey Area Dynamics (GAD) report for the fourth quarter.
“A terrorist strike—most likely in the capital—is highly likely in the coming months,” MIG said, hiking its risk rating on France by 1.5 points to 59.5, the single biggest quarterly rise for a developed economy.
French police arrested four people in a series of dawn raids earlier this month in the town of Montargis, some 100 km (60 miles) south of Paris.
The raids were part of a broadening investigation into Islamist militants suspected of plotting to attack a Paris airport and the capital’s metro system.
Finland, Iceland and Luxembourg remain the safest markets overall for investors with GAD ratings of 28, 29.5 and 31.5 respectively.
MIG defines its GAD indicators as the factors that cause businesses investing overseas to underperform or fail.