Paris before London, the old dream of French finance has come true: according to data from the financial agency Bloomberg, on November 13 the value of the shares of companies listed on the market of the French capital exceeded that of the British capital for the first time.
The announcement is a “beautiful symbol” of a “truly positive dynamic”, welcomed Jean-Charles Simon, general delegate of Paris Europlace, the organization responsible for promoting the Parisian market.
Paris relaunched by the post-Covid recovery
The fall of the pound since September, the difficulties of London-listed companies and the shape of French champions, especially luxury stocks, helped reverse the trend: in 2016, this same Bloomberg indicator gave the British market a very clear lead. But the valuations of Kering, Hermès, L’Oréal and LVMH, Europe’s largest capitalization, have since exploded, thanks to the post-Covid recovery.
Adding to the difficulties of the British economy, especially after Brexit, is “the establishment of a financial alternative” in continental Europe, defends Stéphane Boujnah, CEO of Euronext, the pan-European operator which mainly manages the Paris Stock Exchange.
Faced with the integrated market represented by Euronext’s seven seats, including Milan, Amsterdam and Dublin, “London is no longer the natural listing place for growing companies” in Europe, he said. LSE, the London operator, declined to comment on the information.
However, the advantage of the French place did not last: London took back the number one place, even if the two values are kept in a pocket handkerchief. As of Nov. 22, the aggregate market capitalization of Parisian companies was worth $2.822 billion, compared to $2.855 billion across the Channel according to Bloomberg’s index.
London, world financial centre
“The figure should not be exaggerated,” and its scope, nuance Eric Dor, director of economic studies at the IESEG business school. On many financial products, such as the currency market, precious metals or derivatives, London retains its global aura, he lists. And even on shares alone, “as soon as certificates of deposit are introduced”, which allow a foreign company to be listed on another financial center, the picture is very different from that of the Bloomberg index, he notes.
According to data from financial data specialist Refinitiv, which belongs to the LSE, the total market capitalization of the British market in mid-November thus amounted to $6.2 trillion, compared with $3.7 trillion on the Paris Stock Exchange. “What has always made London superior is that it is a global financial center that attracts foreign equity quotes,” says Dor.
Among the assets of the Parisian marketplace, “leadership in green finance”, a very dynamic branch of finance “with bodies, recurring events to fuel reflection”, notes Catherine Karyotis, finance professor at the Neoma Business School.
According to the latest ranking of the Global Financial Centers Index, one of the benchmarks on trading floors which is based both on questionnaires sent to investors and on economic data from major global institutions, in September 2022 London was the world’s second largest financial center , far behind New York but a good distance from Hong Kong, third. Paris, second in Europe, only ranked tenth.