London has reclaimed its position as Europe’s largest stock market, surpassing Paris, thanks to the surge in crude oil prices. According to Bloomberg’s index, the combined market capitalization of primary listings in London (excluding ETFs and ADRs) is now $2,888.4 billion, while Paris stands at $2,887.5 billion.
Last November, London had lost its status as Europe’s biggest stock market, as the equity slump that started after the UK’s Brexit vote in 2016 continued. However, the market has bounced back recently due to its heavy exposure to commodity stocks, including major players like Shell Plc and BP Plc, which have benefited from rising oil prices.
Janet Mui, head of market analysis at RBC Brewin Dolphin, noted that the UK’s sector mix has played a role in its resilience. The energy sector, being a low-duration play, can act as a hedge against interest rate or inflation-sensitive secular growth exposure.
On the other hand, Paris is facing pressure from China’s economic slowdown. Luxury brands such as LVMH, L’Oréal SA, Hermes International, and Kering SA, which make up nearly 20% of the CAC 40 index, initially drove the rally earlier this year. However, they have since experienced a decline in value, as analysts predict a slowdown in demand for luxury goods in China and Europe.
With a struggling economy and companies moving their share listings to New York, London still has its challenges. Moreover, there is uncertainty surrounding smaller UK shares that are more exposed to the country’s economy.
First Published: Oct 19 2023 | 11:14 PM IST