While the gap is narrowing thanks to the development of the luxury sector in France, the city overall remains the most important financial center in Europe despite Brexit.
Paris ahead of London, the old dream of French finance has come true: according to data from the Bloomberg financial agency, on November 13 the value of the shares of companies listed on the French capital’s market exceeded that of the British capital for the first time.
The display is a “beautiful symbol“of a”real positive momentum” welcomed AFP Jean-Charles Simon, General Delegate of Paris Europlace, the organization responsible for the promotion of the Paris market.
The fall in sterling since September, the difficulties of London-listed companies and the shape of French champions, particularly luxury stocks, have all contributed to the trend reversal: in 2016 the same Bloomberg indicator gave the British square a very clear lead. But the valuations of Kering, Hermès, L’Oréal and LVMH, the largest European capitalization, have since exploded thanks to the post-Covid recovery.
Beyond the difficulties of the British economy, especially since Brexit, there is also “create an alternative“Finance in continental Europe, defended to AFP Stéphane Boujnah, CEO of Euronext, the pan-European operator that notably manages the Paris Stock Exchange.
Given the integrated market represented by Euronext’s seven locations, including Milan, Amsterdam or Dublin, “London is no longer the natural stock exchange for growing companies“in Europe,” he said.
When asked by AFP, London operator LSE declined to comment on the information.
The advantage of France’s place did not last, however: London recaptured its number one position, even if the two values are held in a handkerchief: on November 22, the aggregate market capitalization of companies in Paris was $2.822 billion, up from $2.855 billion Dollar across the Channel according to the Bloomberg Index.
“Don’t overdo the number“And its scope,” explains Eric Dor, Director of Economic Studies at IESEG Business School. “With many financial products such as the foreign exchange market, precious metals or derivatives, London retains its global aura,” he lists.
And even just on stocks,”once the certificates of deposit are introduced‘, which allow a foreign company to be listed in another financial venue, paints a very different picture than the Bloomberg index, he notes.
According to figures from LSE-owned financial data specialist Refinitiv, the total market capitalization of the UK market was $6.2 trillion as of mid-November, versus $3.7 trillion for the Paris Stock Exchange. “What has always made London superior is that it is a global financial center that attracts foreign stock listings‘ explains Mr. Dor.
Among the assets of the Paris marketplace “Leadership in Green Finance“, a very dynamic financial industry “with instances, recurring events to feed reflection‘ notes Catherine Karyotis, professor of finance at Neoma Business School.
According to the latest ranking of the Global Financial Centers Index, one of the benchmarks in trading rooms, based both on questionnaires sent to investors and on economic data from major global institutions, in September 2022 London was the second largest financial center in the world, far behind New York but a good distance from Hong Kong, Third.
Paris, number two in Europe, only number ten.
However, Mr Dor notes a ‘gradual loss’ of market share in London on many counts. In the same ranking in September 2016, two months after the Brexit vote, London just overtook New York, while Paris was only 29th behind the Cayman Islands.