2023-04-19 06:38:17
But what drives the CAC 40? While inflation continues on its way in France, consumption is showing signs of running out of steam and rising rates are starting to seriously seize up the real estate market, the flagship index of the Paris Stock Exchange is doing like a charm. Up almost 16% since the start of the year, it even broke a historic record on Friday, April 14, by crossing the 7,500 point mark. Since then, he evolves around this bar to which he seems well attached.
Alexandre Baradez, head of market analysis for the broker IG France, judges that this Olympic form “is nothing like a bubble, because it is linked to objective factors in the real economy”. Admittedly, there are magnifying effects: a quarter of this index is made up of luxury companies (LVMH, Essilor-Luxottica, L’Oréal, Kering, etc.), not or not very sensitive to rate increases practiced by central banks. for several months, insofar as their clientele is largely creditworthy.
The results of L’Oréal, expected on Wednesday April 19, should confirm this trend, as should those of Essilor-Luxottica on Thursday 20. It is this significant weight of luxury which explains in particular why the Paris stock market is doing particularly well, compared to its European neighbours.
Reopening of China
“But these luxury values are also driven by the reopening of the Chinese economy”, completes Alexandre Baradez. Their access to this huge and lucrative market has thus been restored. Other sectors are benefiting from this, such as tourism and leisure (Accor group), or even industrial companies which are resuming their trade with Beijing.
And then, adds analyst Marc Fiorentino, for Meilleurtaux.com, “Utilities also reaped record profits, as did companies that have significant pricing power in the market. These were able to pass on to consumers all of the increase in their production costs, and sometimes even more, which inflated their results”.
In fact, in 2022, CAC 40 companies redistributed 80 billion euros, an unprecedented amount, to their shareholders, both in dividends and in share buybacks. By massively buying back their shares, companies contribute to boosting their stock market price. “It’s a relatively new phenomenon on our side of the Atlantic, decrypts Christopher Dembik, of Saxo Bank, and this also explains the good health of the CAC. »
Major pan of the French economy
This can be interpreted in several ways. “The reality is that these luxury players represent an enormous weight in terms of employment and wealth creation, and are also major tax contributors for France.continues Christopher Dembik. Obviously, the stock market does not really reflect the state of the French economy. But we can still consider that the good performance of luxury reflects the good health of an entire and major part of our economy. »
For Alexandre Baradez, “it is clear that the CAC 40 is not France because this index above all represents companies that operate all over the world. The “small capitalization” companies have very domestic activities and do not post such records but they are still doing well too”.
“Landing”
Can the CAC 40 continue its momentum? “Luxury could still progress this year, replies Christopher Dembik, and I am counting on a total appreciation of the CAC of 20 to 25% over the entire current year. » Marc Fiorentino, for his part, displays forecasts “neutral to positive, marked by three unknowns: what will be the magnitude of the announced slowdown in activity in the world; will the rise in interest rates cause negative effects not yet identified; and will companies be able to maintain solid results in the face of the emergence of deconsumption? »
Alexandre Baradez points to another risk, “the one that interest rates remain permanently high. From now on, with prices still high and wages which will progress less, this year 2023 should be that of a landing, of a normalization ”. The French economy will be resilient, but less dashing.
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European stock markets are doing better than the United States
The evolution of the main European indices since January: Germany: DAX +13%; Spain: Ibex +14.18%; UK: FTSE 100 +5.9%; Italy FTSE MIB +17.2% (due to banking and luxury stocks); United States: S&P 500 +8.1%
The CAC stocks that have progressed the most since January: ST micro : + 39,6 % ; Hermès : + 35,9 % ; LVMH : 29,9 % ; Stellantis : 29,1 % ; Publicis : 28,1 %.
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