London has lost its title of largest stock exchange in Europe to Paris. The combined market value of the largest companies on the French stock exchange exceeded that of the large listed British companies measured in US dollars, reports financial news agency Bloomberg based on its data.
The difference in value is caused by concerns about the UK economy, which is heading for a prolonged recession. The gloomy economic outlook is putting pressure on the price valuations of British domestic-oriented companies.
In addition, due to the sharp rise in energy costs, the British have become more careful with their expenditure. As many home mortgages have flexible interest rates, UK homeowners also face rising interest payments. As a result, the share prices of the major British homebuilders are under pressure.
Exchange rate effects also favour the Paris stock exchange. The British pound has depreciated more than the euro against the US dollar. The turmoil sparked by former British Prime Minister Liz Truss’s failed budget plans caused the pound to plunge to its lowest level since 1985 against the dollar. The British currency has since appreciated again somewhat against the dollar due to the arrival of the new Prime Minister Rishi Sunak and the cancellation of Truss’ plans. But the euro has also rebounded against the dollar.
Large luxury goods groups also dominate the French stock market. And the shares of these companies, including Louis Vuitton owner LVMH and Gucci owner Kering, have risen sharply in recent times in hopes of a possible easing of strict corona policy in the crucial Chinese market. LVMH, which owns champagne brand Moët et Chandon and cognac brand Hennessy, is now worth around USD 360 billion, making it the most prominent European company by market value.
The difference in total market value between the London and Paris exchanges has narrowed since the British voted to leave the European Union in 2016. British stocks are now worth about $2.821 trillion. That’s slightly less than the roughly $2.823 trillion for French equities. In 2016, British equities were worth about $1.5 trillion more than French ones.
