What is the CAC 40?

The Paris Stock Exchange is a hit, the CAC 40 broke a new record yesterday by passing the 7,900 point mark. The flagship index of the Paris Stock Exchange is taking full advantage of the very good company results in 2023.

The CAC 40 was launched in 1988 and two notions make up this term. LThe first, “CAC”, means “continuously assisted quotation”. The values ​​which make up the index are calculated “continuously”, according to supply and demand, all “assisted” by computer. The second notion, “40”, means that the index is made up of 40 stocks, the 40 largest French companies listed on the stock exchange.

The luxury sector dethrones the internet and telecoms

At the moment, the “star” stocks of the CAC 40 are in the luxury sector: LVMH, Kering, l’Oréal, Hermès. These companies account for almost a quarter of the total weight of the index. The stars of today are not those of yesterday, in the year 2000, luxury weighed four times less than today in the CAC 40. It is the sector of “internet and telecoms ” which dominated, notably with France Télécom or Alcatel. Today, Orange has replaced France Telecom and weighs much less, as for Alcatel, the group has completely left the index.

A scientific council decides who enters and who leaves

It is made up of experts who meet four times a year to determine which companies are the most representative and on which there are the most transactions. LOne of the last groups to leave the CAC 40 was the Accor hotels six months ago, replaced by the rail transport giant Alstom.

An index still rising despite the crises

Since its creation in 1988, the index has started from a base which has been set at 1,000 points; in 2024, with 7,900 points, it is almost eight times higher. However, the CAC 40 experienced some downward shocks. First in the early 2000s, after the bursting of the internet bubble, the CAC was almost divided by three in two and a half years. Then, at the end of the 2000s and the financial crisis, the CAC 40 experienced another enormous fall. And yet another drop in 2020 with the covid crisis. The CAC recovered more or less quickly each time. But sometimes, stock market crashes can be long and painful: the Tokyo stock market took 34 years to return, this week, to its record level of 1989.