We are continuing our series of articles on the world’s major exchanges. Today, we are going to write about Euronext Paris. Letter T stands for trillions, B for billions, and M for millions.
Euronext Paris’ Place in the Global Economy
Euronext Paris is the largest exchange in the Euronext group. Aside from the Paris exchange, Euronext also includes stock exchanges from Amsterdam, Brussels, and Lisbon. Euronext is the world’s fifth by the listed companies’ total market cap. It holds the first place on continental Europe’s stock market, but is behind the London Stock Exchange. Euronext’s total market cap is $3.3T, and the number of its listed companies is about 1,500.
The majority of Euronext’s listed companies — around 1,000 — trade their stocks on Euronext Paris. Many of these companies are widely known: Airbus, L’Oréal, Danone, Renault, Peugeot, Christian Dior. Euronext Paris also calculates the CAC 40 stock index — one of the world’s most well-known indices.
Euronext Paris’ building, Palais Brongniart — its construction was ordered by Napoleon himself
Euronext Paris is one of the world’s oldest stock exchanges. Called the Paris Bourse (Bourse de Paris in French) before 2000, it was founded in 1724 by France’s Royal Council — quite a while before the London and New York Stock Exchanges. The exchange was temporarily closed after the French Revolution, but reopened in 1801 by Napoleon.
Still, the stock market in France grew very slowly, even in the new capitalist society. From 1815 to 1829, 98 joint-stock companies emerged in France, but only a few of them traded their stocks on the Bourse. Only 4 types of securities were being traded on the Bourse in 1814, 13 in 1820, 32 in 1825, and 38 in 1830. Only in the second half of the 19th century was the Paris Bourse actually able to compete with other major European stock exchanges.
In 2000, the Bourse merged with the Amsterdam Stock Exchange (the world’s oldest stock exchange, founded in 1608), and the Brussels Stock Exchange (founded in 1801), forming the Euronext group. In 2002 the group also acquired the Lisbon Stock Exchange (founded in 1769), and the London International Financial Futures and Options Exchange (LIFFE, founded in 1982). The stock exchanges were renamed to Euronext Paris, Euronext Amsterdam, Euronext Brussels, and Euronext Lisbon, respectively.
In 2007, Euronext merged with the NYSE into the gigantic NYSE Euronext conglomerate. In 2013, it was in turn acquired by the Intercontinental Exchange company and reorganized. Specifically, LIFFE once again became an exchange separate from Euronext, and now Euronext is purely a group of stock exchanges that are members of Intercontinental Exchange. In practice, though, all of these exchanges remain largely autonomous, and so we shall review them all individually.
The CAC 40 Index
Since 1987 the Paris Bourse, now Euronext Paris, calculates one of the most famous national stock indices — CAC 40. It is proportional to the exchange’s 40 largest companies’ total market cap. Its initial value in 1987 was picked as 1000, and theoretically it can be plotted back into the past, when the companies’ market cap was significantly smaller.
CAC 40’s graph on a logarithmic scale, starting with 1964
The extended graph spanning the period from 1965 to 2012 clearly shows that the French economy experienced the most rapid growth in the 1980s and the 1990s. During that time, the index’s value increased 16-fold. But then the index showed a negative trend that lasted many years. The 1999-2000 dot-com bubble and the 2006-2007 real estate bubble are clearly visible on the graph. The crises of the 2000s had a negative impact on France’s economy, and the CAC 40 index has not yet managed to surpass 2000’s record. Even now in 2016 (not shown on the graph) the index’s value is about 4400 — the same as in 1998.
To invest in CAC 40, one needs to purchase a share of the Lyxor exchange-traded fund for CAC 40 (Lyxor ETF CAC 40), with the ticker symbol CAC. Its value is proportional to CAC 40’s value. By reselling Lyxor ETF CAC 40 shares, one can exploit the fluctuations of the CAC 40 index.
What an Investor Should Keep in Mind
Continental European markets are less popular with online brokers than the Anglo-Saxon ones. Regardless, the majority of online brokers provide access to Euronext Paris. It goes without saying that the broker must give direct market access, or DMA, to the exchange, rather than simply giving contracts for difference, or CFDs. EXANTE is one of the brokers that gives DMA to Euronext Paris.
The full list of companies that trade their stocks on Euronext Paris can be seen on the Stock Screener service at finance.google.com (pick «France» in the first box, then «NYSE Euronext Paris» in the second). Let us see which companies hold the first place according to various criteria in this year.
The companies with the highest market cap are the Total oil and gas company (ticker symbol FP, market cap €104B), and the L’Oréal cosmetics giant (ticker symbol OR, market cap €93B). The highest 52-week price increase is shown by Société Française de Casinos, the union of French casinos (ticker symbol SFCA, market cap €12M, 52-week price increase 248%, the C&Co finance company (ticker symbol CIEM, market cap €6.8M, 52-week price increase 164%), and the Xilam Animation media company (ticker symbol XIL, market cap €20M, 52-week price increase 130%). The highest five-year earnings increase was shown by the A.S.T. Groupe construction company (ticker symbol ASP, market cap €50M, 5-year earnings increase 159%) and the MEMSCAP engineering company (ticker symbol MEMS, market cap €11M, 5-year earnings increase 111%).
The most expensive shares belong to the Compagnie du Cambodge international investment company (ticker symbol CBDG, market cap €4.1B). It costs €7300, but has low liquidity as a result: only one share per day changes hands on average. The highest daily trading volume is shown by the Axa finance company (ticker symbol CS, market cap €45B, daily trading volume 6.6M shares, share price €19), and the Orange telecommunications company (ticker symbol ORA, market cap €36B, daily trading volume 5.7M shares, share price €13).
The working hours for all Euronext members are 11:00 to 19:30 Moscow time (9:00 to 17:30 Paris time). The commissions online brokers charge are typically measured as a percentage of the amount being traded, and usually range between 0.05% and 0.15%. The minimum commission per deal is usually a few euros. With EXANTE, the commission is 0.05% of the amount being traded, and there is no minimum commission.