Posted on Jan 2, 2021 at 7:18 am
In ten years, the profile of the CAC 40 has changed profoundly. The flagship index of the Paris Bourse has evolved according to the entries and exits of the index, but also through the divergent paths of its members. Its transformations reflect those of the economy, but also the changing expectations of investors.
At first glance, the record is not glorious. The CAC 40 has risen by only 47% since the end of 2010, an average annual increase of 3.9%. Far from the almost doubling of the German DAX over the period. However, the performance improves significantly with the inclusion of dividends: the average annual growth then reached nearly 7.5%, and exceeded that of the DAX.
Aeronautics takes off
Some CAC stocks have done much better. LVMH (owner of the Les Echos Group), L’Oréal, Kering and Hermès – the latter having joined the index in 2018 now weigh more than a third of the entire CAC. Ten years ago, the luxury sector represented less than 15% of the index. All these stocks posted triple-digit growth rates over the period, from 377% for L’Oréal to more than 560% for Hermès.
Just a year ago, Airbus performed better than these heavyweights on the Parisian coast. But the coronavirus crisis has not spared the European aircraft manufacturer, which has fallen by 30% this year. It remains nevertheless one of the great stock market successes of the decade, going from the 22nd to the 6th capitalization of the index. With the entry of Safran and Thalès into the CAC 40 in recent years, aeronautics has taken pride of place on the Paris Stock Exchange.
On the contrary, other sectors saw their place in the index wither away, notably fossil fuels. Total is the only survivor of the sector, after the exit of Vallourec and TechnipFMC. And the French major has stagnated over ten years, a reflection of the importance taken by environmental concerns. Likewise, the banking sector has had a complicated decade. Societe Generale posted one of the worst performances of the index, falling by more than 40% over the period, while BNP Paribas showed a decline of 10%. Only Crédit Agricole ended the decade on the rise, driven by its listed asset management subsidiary, Amundi.
Renault in reverse, Peugeot accelerates
Certain developments are more linked to the specific situations of companies. The hierarchy of car manufacturers has thus been reversed. While Renault was twice the size of Peugeot at the end of 2010, it is now the opposite.
In the future, the technology sector should take more place within the ACC, driven by investor appetite for these stocks. It has already experienced a recent breakthrough, from less than 2% of the weighting of the index to more than 6%, in particular thanks to the arrival of Dassault Systèmes, Teleperformance and Worldline. STMicroelectronics, already present in the index at the end of 2010, has since almost quadrupled in size, rising from 7 to 27 billion euros in capitalization.