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Paris is challenging London.

 

Paris is challenging London’s lead as the home to Europe’s biggest stock market, eating away at Britain’s position after Brexit as the continent’s most important financial centre. The market value of all the companies listed in the French capital has soared from $1.8tn at the start of 2016 to $2.83tn, closing in on the value of London shares at $2.89tn, according to Refinitiv( financial advisories). «This gap between London and Paris in the domestic market is much smaller than it used to be or should be,» said William Wright, founder of New Financial, a UK think-tank. «It’s the result of the poor performance of UK stocks, the poor pipeline and performance of UK new issues, and the terrible performance of sterling,» he added.

The narrowing gap has worried UK policymakers eager to tout the benefits of leaving the trading bloc and reestablish London’s post-Brexit appeal as Paris, Frankfurt, and Amsterdam take slices of its daily activity. London has retained its status as the world’s leading hub for foreign currency and derivatives trading, even though its share of both markets has slipped. But the gap it traditionally enjoyed in equities over other European centres is evaporating since Britain left the Single Market. More than €6bn of European-listed shares typically traded in the City left on the first trading day, allowing Amsterdam to claim the crown as the most active equity market.

The value of shares on London bourses in dollar terms has been pressured by a fall in the pound since 2016, the year of the Brexit referendum. To reestablish its traditional lead, the UK government aims to finalise proposals to reform the City of London in the coming months. Among the changes it plans are tweaks to the listings regime to make it more attractive for companies to list. However, the UK has attracted 60 new listings that have raised more than $100mn over the past three years, for a total value of $26bn, compared with France’s 19 listings that have drawn in $8bn, according to Schroders.

«Growth in the number of new listings provides a better reflection of the health of a stock market,» said Andrew Lapthorne, a quantitative strategist at Société Générale. Nevertheless, the competition from Paris is set to intensify as fund managers rank France as the favourite European stock market. A net 30 per cent of fund managers said in November that they intended to «overweight» French equities over the next 12 months, according to a Bank of America survey of 161 investment managers with combined assets of $313bn. The Liz Truss government’s ill-received «mini» Budget badly damaged confidence among fund managers, with those intending to overweight the UK dropping sharply from a net 37 per cent in September to zero in November.

«France has enjoyed better tailwinds, with luxury goods companies performing strongly and greater exposure to industrial companies and tech plays».

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Comments

  1. Justin18 November 2022 at 12:02

    And I would add, this small gap is caused by the frequent changes in Government in UK plus all sorts of disscussions about new taxes and such. Everything matters.

    ReplyDelete
    Replies
    1. Kyle18 November 2022 at 14:20

      It won't be long and Paris will overtake London. Maybe in 2 months.

      Delete

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