The time has come for the balance sheet for the Paris Stock Exchange. At the end of the year, the CAC 40 lost 9.5% of its value, a performance we haven’t seen since 2018. Against this backdrop of inflation and uncertainty, should we continue to invest in the stock market in 2023?
The year 2022 has had its large share of twists and turns, and especially information that doesn’t necessarily lend itself to optimism. War in Ukraine, various repercussions of global warming, in short, the right cocktail to cause a withdrawal of capital invested in the stock market.
In France, 2022 will be considered a black year for the Paris Stock Exchange. The CAC 40, the index comprising the forty largest French companies, lost 9.5% for the full year. A decline that marks the worst annual performance since 2018. However, this decline comes after the sharp rebound recorded last year, at the end of the health crisis, by almost 29%.
And in the end it’s not so disastrous, as we’ve focused on almost everything stock markets hate, namely anything that hurts corporate profits, for twelve months. Galloping inflation, rising interest rates, the stalemate of the war in Ukraine… but Paris is still better than Frankfurt or Wall Street!
Defense overcomes, luxury resists
While fewer than one in four CAC 40 stocks finished 2022 higher, some sectors are faring much better than others.
By far the best sector this year is defense. The Thalès company index, for example, recorded a rise of 59%. From Safran, we’re pleased with an 8.6% improvement.
Also of note was another good performance for energy companies, which are also seeing their stock market value spike. Total Energies stock, for example, jumped 33%.
As for the large French luxury groups, such as LVMH or Hermès, the stocks are holding up quite well (between -5% and -6%) in the difficult stock market environment. More complicated instead for the automotive, food and banking sectors (between -12% and -22%).
Less catastrophic figures than those of the retirement home sector, after the Orpéa scandal. The company’s stock price has fallen massively, losing 90% of its value over the past year and taking the Korian stake with it.
So should you invest in the stock market in 2023?
That said, should the adage “compra i cali” (“Buy the dips”) be taken literally at the start of the year? Impossible to be categorical on the matter, however the context of this new year should be a little more favorable than in 2022.
In 2023, there will probably not be as unexpected and catastrophic events as in 2022. In addition, inflation will slow down and interest rates will no longer rise much, or at least less sharply than in the previous year.
So yes, we can reasonably say that we can enter the stock market. But we must always tell ourselves that it is preferable to focus on themes rather than on a particular title.
Thematic sector funds (several companies therefore) in health or energy are sectors that should be buoyant in the coming months. It is also possible to purchase a “tracker” from your bank, a financial product that reproduces the evolution of the CAC 40.
More than ever, the advice to remember is never to put all your eggs in one basket: growth remains mediocre, the regulated rates of the Livret A will continue to rise. Prudence is the mother of safety!