(News Bulletin 247) – Thursday, the CAC 40 settled for the first time in its history above 8,000 points. A look back at the very eventful life of the Parisian index, reflecting the 40 flagship companies of the French economy.

In 36 years, the flagship Parisian index has overcome the internet bubble of 2000, withstood the subprime crisis then recovered from the coronavirus pandemic to exceed the flagship threshold of 8,000 points this Thursday, March 7.

What a long way we have come since December 31, 1987, the date on which the value of the CAC 40 index was set by convention at 1,000 points. But it was a few months later, on June 15, 1988, that the CAC 40 was officially launched. Its acronym stands for “continuously assisted rating”.

In 1994, the range of indices was enriched with the CAC 40 GR, the version of the index which integrates the reinvestment of dividends and which is considered a fairer and more serious measure of stock performance. Then on December 1, 2003, the CAC 40 adopted a floating capitalization system in its calculation method, i.e. the number of securities actually available and tradable on the market.

Riding the trend of the socially responsible economy, Euronext is launching the CAC 40 ESG index on March 22, 2021, which brings together 40 companies that have demonstrated best practices from an environmental, social and governance (ESG) point of view.

An index excluding dividends multiplied by 8 since its beginnings

Including dividends, the CAC 40 index is above 24,000 points, more than two and a half times higher than the low point reached at the time of the Covid crisis (9,880 points). However, over 20 years (since March 31, 2004), the performance of the S&P 500, a major American index which brings together the 500 large market capitalizations in the United States (+570%), is much higher than that of the CAC 40 including dividends (+ 330%).

Behind this beautiful journey, the CAC 40 has experienced many highs but also very difficult periods. The 2000s were prosperous for the Parisian star index. On September 4, 2000, it set a new record at 6,944 points against a backdrop of soaring indices in the euphoria of technological stocks, like France Telecom.

Moreover, STMicroelectronics holds the prize for the strongest annual upward variation to date. The semiconductor specialist ended 1999 with a dizzying increase of +355%.

And a year later, the index lost 7.3% in a single day, the day of the attacks of September 11, 2001. A little less than two years later, the CAC 40 hit rock bottom at 2,401 points as a result of the breakup. of the internet bubble from 2000 to 2003. Before leaving better. Between 2003 and 2007, the CAC 40 rose again and peaked in June 2007 at a high point of 6,168 points.

History shows us that after this summit comes a new crisis on the markets. In 2008/2009, the subprime crisis – these American risky real estate loans – put an end to the rise of the index which returned to a low point of 2,465 points in March 2009.

It was also during this financial crisis that Dexia collapsed. The Franco-Belgian bank experienced serious difficulties with the subprime crisis, penalized by FSA, its American subsidiary specializing in credit enhancement. In 2008, Dexia experienced a annus horribilis on the stock market by losing 81% of its value, making this fall the strongest annual downward variation in the flagship Parisian index.

In 2011, the debt crisis in the euro zone also caused turbulence on the markets. Calmness returns to the markets thanks to the intervention of the European Central Bank and the International Monetary Fund (IMF).

Ten years passed without a major crisis until March 12, 2020. That day, the index experienced the biggest fall in its history, closing at -12.28%, investors giving up in the face of the Covid-19 pandemic and its feared impact on the global economy. Global indices including the CAC 40 experienced a spectacular and almost linear rise until 2022 against a backdrop of recovery thanks to massive support from central banks and vaccination.

Then last year, the war in Ukraine, inflation and monetary tightening caused the index to collapse. The CAC 40 ends 2022 on a sad note, down 9.50% compared to December 31, 2021, the year at the end of which it jumped 28.85%.

From 2023, corporate results at record levels followed by rapid disinflation will give impetus to the CAC 40. The French Parisian market as a whole exceeds that of London in terms of market capitalization of listed companies.

Nearly a quarter of the index has never changed

In more than 30 years, the Parisian index has seen its composition change. It is the Scientific Council for Indices (CSI) of the Paris Stock Exchange which decides on the integration of a value into the Holy of Holies. And some companies have remained faithful to the CAC 40, because they meet the criteria to be included in the Parisian stock market elite.

Nearly a quarter of the CAC 40 has therefore never left the index. The companies Air Liquide, Carrefour, Danone (formerly BSN), L’Oréal, LVMH, Michelin, Saint-Gobain, Sanofi, Société Générale have achieved the feat of never having been ousted from the flagship Parisian index.

Among the shareholders of these flagships of the economy, we include Anglo-Saxon pension funds which invest in the markets to grow retirement savings, as opposed to the French pay-as-you-go pension system. Non-resident individuals and investors in France held 40.3% of the capital of the 35 CAC 40 companies with their head office in France in 2022, according to the Banque de France

Large families form the first category of investors in the CAC 40, with more than 20% of shares, according to the most recent data calculated by the operator Euronext, finalized at the end of 2021.

Among the 10 largest shareholders are the Arnault family (7.4%), that of Hermès (4.6%), the Bettencourt Meyers family (3.3%), the Pinault family (+1.6%) and the Dassault family (1.2%). The French state holds 1.9% of the shares of CAC 40 companies.

As for individual shareholders, just over a million and a half will have bought or sold shares directly in 2023, a high figure but a little less than in 2021 which was a record year.

(With AFP)