Mar 22, 2023
London Losing to Paris in Battle of Equity Markets
(Bloomberg) -- In the competition to be the biggest stock market in Europe, Paris is starting to leave London in its wake.
After becoming the region’s largest center for trading equities for the first time in November last year, the French bourse has widened the gap against rival London. With a total market capitalization of $3.13 trillion, Paris now exceeds that of the UK’s capital by $250 billion, according to data compiled by Bloomberg.
That’s due to the French stock market strongly outperforming the UK this year, with its benchmark CAC 40 index surging 10% in local currency terms, versus just 1% for the FTSE 100. While the pound has risen slightly more than the euro against the dollar, that’s done little to blunt the impact of French blue-chip gains.
Luxury’s Golden Age Makes France the New Stock Market Winner
The French index is being boosted by luxury goods and consumer stocks including LVMH SE, L’Oreal SA and Hermes International, as well as industrials such as Schneider Electric SE. Meanwhile, the FTSE 100 has been dragged down by poor performance from mining stocks, while energy shares have only posted small gains.
The market capitalization is calculated from all shares outstanding, excluding ETFs and ADRs, according to data compiled by Bloomberg. It includes only actively traded, primary securities on the country’s exchanges.
The London market has faced numerous challenges since the UK voted to leave the European Union in 2016. Valuations have plunged along with the British currency, triggering a wave of foreign acquisitions, while the market for new listings has remained in the doldrums.
London’s Investment Appeal Is Unraveling as Arm Heads to the US
Large firms have started to question the advantages of keeping a primary listing in London, with some major departures including BHP Group Ltd and Ferguson Plc. Building materials company CRH Plc has also announced its intention to leave, while the market has failed to attract major initial public offerings, even from homegrown firms like Cambridge-based Arm Ltd.
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