A tale of two stock exchanges: How London still trumps Paris for investors

A tale of two stock exchanges: How London still trumps Paris for investors

By Joice Alves, Vincent Flasseur and Samuel Indyk

LONDON – The luxury stock market in Paris is now worth more than that in London. But while size matters, there are other indicators pointing to the UK capital’s popularity with investors.

While the UK has seen a larger exodus from equity funds since 2020 than in Paris, companies have raised more money in London initial public offerings (IPOs) and more and more Shares change hands in UK markets every day.

France CAC The All Shares index is now worth nearly $3 trillion, making it Europe’s largest stock market by value thanks to demand for its luxury retailer blue chips.

London FTSE The All-Share Index, meanwhile, is worth $2.8 trillion, according to data from Refinitiv.

Close the gap https://graphics.Reuters.com/FRANCEBRITAIN/jnpwyexdlpw/chart.png


So far in 2022, funds investing in UK equities have seen record outflows of €23bn, according to Refinitiv Lipper, up from nearly €18bn last year and €14.6bn. euros lost in 2016 when Britain voted to leave the European Union.

Annual outflows from French equity funds are much lower – at 2 billion euros this year.

Bye London, goodbye Paris Bye London, goodbye Paris https://graphics.reuters.com/FRANCEBRITAIN/lgpdkwnzbvo/chart.png

Initial Public OfferingDESTINATION

But London remains a much bigger destination in terms of number and volume of IPOs, even with Initial Public Offering volumes down 80% in Europe this year compared to last year and more than 90% in the United States, according to Dealogic.

After recording its second strongest year for corporate listings since 2007 in 2021, the London Stock Exchange saw 41 debuts with a total transaction value of 1.18 billion euros ($1.22 billion) so far in 2022, more than double the 474 million euros raised in 11 IPOs in Paris, according to Dealogic.

Amsterdam – Europe’s largest center by average daily value traded according to CBOE data – has seen only two IPOs so far this year for a total of 411 million euros, according to Euronext.

More London IPOs https://graphics.Reuters.com/LONDONPARISIPO/dwvkdrzbqpm/chart.png


In a volatile stock market environment, Paris can count on significant private equity stakes in its companies to provide some stability.

The average free float for French large caps is around 70% and for smaller companies around 50%, according to Euronext, well below London where the average free float for FTSE The All-Share Index represents nearly 90% of total shares outstanding, according to Refinitiv.

“For an institutional investor, from an investability perspective, the amount of free float that still exists, the UK is still much more important,” said Ben Laidler, global macro strategist at eToro.

Indeed, the first three shareholders of Paris are private investors: the Arnault family, which owns half of LVMH – The largest European company by market capitalization – the Hermès family and the French government. By comparison, the world’s largest asset manager, Blackrock, leads in London.

In terms of market activity, the average daily value traded in Amsterdam was over €10 billion in October, closely followed by London with €9.4 billion – about the same as Paris and Frankfurt combined, according to data from CBOE Global markets.

Luxurious Paris https://graphics.Reuters.com/FRANCEBRITAIN/jnpwyejbnpw/chart.png


The London weakening is the discount at which the FTSE The All-Share Index trades against global equities, which since the Brexit referendum in 2016 have risen to their highest level since 1990 at 35% on a price-earnings ratio.

UK stocks hit record discount to global peers https://graphics.Reuters.com/FRANCEBRITAIN/klpygkqbdpg/chart.png


London, very energy-intensive, wins big in terms of dividends. In the third quarter, British companies paid out $28.7 billion, more than seven times the total paid out in France, according to the Janus Henderson Investors Global Dividend Index.

London FTSE All-Share also offered better returns to investors this year. Total annualized returns for the index are 2%, compared to returns of nearly minus 6% for the index CAC All stocks, according to Refinitiv data.


It should also be noted that currency comes into play when measuring the market size of London versus Paris in dollar terms. The British pound has fallen around 11% against the US dollar this year, while the euro has lost around 9%.

($1 = 0.9658 euros)

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