Pfor 2 small billion dollars! The Paris Stock Exchange exceeded, Monday, November 14, the London market by the amount of its capitalization. It reached 2,823 billion dollars (2,713 billion euros), against 2,821 billion for its British competitor, according to calculations by the financial agency Bloomberg. This is one more sign of the weakening of the first place in the Old Continent since the United Kingdom’s exit from the European Union (EU) in 2021, following the June 2016 referendum.
The Footsie 100 index has certainly resisted better this year than the CAC 40 (− 1.5% against − 8%), but the second has reduced the gap, which was still 1,500 billion dollars before Brexit. Transactions in shares listed in euros left the City for Amsterdam or Paris. Major companies have dropped it, such as low-cost airline Ryanair in 2021 in favor of Euronext Dublin, and British-Australian mining giant BHP, Footsie 100 heavyweight, for Sydney.
Luxury, the locomotive of the CAC 40
Currency parities also worked against London, where companies are listed in pounds sterling. Since the beginning of 2016, the British currency has depreciated by 16% against the European currency, mechanically favoring the Paris market. The good behavior of the latter also owes a lot to the surge in the price of luxury companies, locomotives of the CAC 40 for a good ten years: LVMH, valued at 352 billion euros, has become the largest capitalization in Europe; Hermès, Kering and L’Oréal also weigh heavily, even if the value of these companies has eroded since January.
Casting off the moorings with Europe has deteriorated the business climate across the Channel, while Brexiteers assured that this departure would boost activity finally freed from the shackles of the EU. “The UK economy as a whole has been permanently damaged by Brexit”which opened a “chaotic times”notes Michael Saunders, former external member of the monetary policy committee of the Bank of England, Monday, November 14, on Bloomberg TV.
It will last. The tax increases and the clear cuts in public spending, which will be announced on Thursday, November 17, should reassure the markets. They will plunge the country into recession. All of this bodes ill for the City, whose golden age is well and truly over.