The British stock exchange lost European preeminence for the first time in favor of its counterpart across the channel; This is according to the calculations of the “Bloomberg” news agency, which estimated the value of the companies traded on each of the stock exchanges in dollar values. According to the agency, this is an ongoing process that has progressed gradually in recent years, and especially since “Brexit”, the withdrawal of the United Kingdom from the European Union. On the eve of retirement, the gap between the value of stocks traded in London and those traded in Paris stood at 1.5 trillion dollars, but now it has reversed, and stands behind by several hundred million dollars.
● The dilemma in Europe: should we deal with inflation with austerity measures or by deepening the debt?
Several factors contributed to the historic upheaval, at the end of which London is no longer the home of the continent’s largest stock market, among them the decline of several large British companies amid fears of an impending recession in the United Kingdom. Inflation in Great Britain (10.1% in October), accompanied by an acute energy crisis, translates into estimates that the British economy is already in a shrinking trend, and that Great Britain is facing its longest recession in recent decades, which will only end in 2024. In addition, the fact that the pound depreciated to a historic low against the dollar – the currency in which the comparison was made – contributed to the decline in value. The British currency lost about 13% of its value in the past year against the dollar, compared to a loss of 9% for the euro.
Luxury brands strengthened on expectations that China will reopen
In addition, the Paris Stock Exchange is the trading place of the luxury giant LVMH, whose market value is more than 350 billion euros. The French company, which owns champagne, fashion, design, bags and textile brands, gained strength last week amid estimates that China – a major customer of the luxury goods – will reopen and change its “zero tolerance” policy towards the corona virus. The company that owns the Gucci brand and other companies also strengthened against this background.
The UK stock market suffered a severe blow in September when the short-lived Liz Truss government came to power. The economic plan of Truss and its Minister of Finance led to a loss of confidence in British fiscal policy, and to the “shaving” of approximately 500 billion pounds from the value of assets on the London Stock Exchange, according to “Bloomberg” calculations. Rating agencies estimated that the drop in value reflects the precarious economic situation in Great Britain, and the fears of a deep and long recession. The value of the securities traded on the London Stock Exchange stands at 2.281 trillion dollars, compared to 2.823 for the companies traded on the Paris Stock Exchange. According to other calculations by the Statista agency, they are followed by the Swiss Stock Exchange (aggregate value of 1.65 trillion) and the Frankfurt Stock Exchange (1.54 trillion).