London wins back its Europe’s largest stock market crown from Paris- QHN

London has recaptured its crown as Europe’s largest stock market from Paris, lifted by surging crude oil prices. The combined market capitalisation of primary listings in London — excluding ETFs and ADRs — is now $2,888.4 billion versus Paris’s $2,887.5 billion, according to an index compiled by Bloomberg. 

London had lost its status as Europe’s biggest stock market last November, extending an equity slump that stretched back to Britain’s vote to leave the European Union in 2016. But the market, heavily weighted to commodity stocks, including blue chips Shell Plc and BP Plc, has outperformed recently due to rising oil prices.

“The UK has held up better due to its sector mix,” said Janet Mui, head of market analysis at RBC Brewin Dolphin, “The energy sector is a low-duration play which can hedge against more interest rate or inflation-sensitive secular growth exposure,” she added.

Barclays strategists led by Emmanuel Cau upgraded the energy sector to overweight on Wednesday — de-facto adding to overweights on UK and value stocks. 

The picture contrasts with Paris, which is under pressure from China’s economic slowdown. LVMH, L’Oreal SA, Hermes International and Kering SA between them comprise almost a fifth of the CAC 40 index, and drove the rally earlier this year. All have slid from the highs hit earlier this year, as analysts warn that demand for posh handbags and jewellery is likely to slow in China, as well as at home in Europe. 

That’s knocked off nearly $270 billion in market value from their peaks in April this year. London’s problems are by no means over, with an economy in doldrums and companies fleeing to New York for share listings. And, among smaller UK shares more-exposed to Britain’s economy, the outlook is murkier.

First Published: Oct 19 2023 | 11:14 PM IST

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