Euronext Paris (CAC 40) - French stock market overview

Week 18 (30.04.2012 04.05.2012) Trading week 18 has started on April, 30. It was rather short consisting of only 4 working days. From the graph below you can see that CAC 40 index has moderately decreased in weight on Monday. However, after the holiday it has opened at the starting value which was much higher than the closing one at the end of Monday. During Wednesday the index has lost almost the same number of points as it has gained via increasing the starting value on Wednesday. Very similar situation happened on Thursday: the index has been falling, but at the end of the day its closing price appeared to be the same as the one for the previous day. However, Fridays trade in the stock exchange determined negative development of the indexs value. During that day CAC 40 has fallen down very seriously from 3224 to 3163 points. Overall, the index has fallen by 1.58%, which meant that the moderate fluctuations during first 3 days have been outweighed by the fall on the last one. The highest value that the index has reached was 3271.33 (Thursday), whilst the lowest was 3153.92 points (Friday).

Figure 1: CAC 40 index development during week 18. Retrieved from http://finance.yahoo.com/

The biggest winner this week was Electricite de France SA with its 1.18% gain in stock price. Legrand SA is at the second place with 0.81% increase in price per share. Danone SAs stock went up by 0.45% in price which was the third highest gain among the companies that are represented in CAC 40. On the other hand, Axa SA has had the most significant negative gain in stock price of impressive 12.02%. This stock was followed by Vivendi SA which has experienced more modest decrease of its share value of 8.96%. The weeks third loser was Renault SA. Its price fell by 8.92%.

During this week Electricite de France SA experienced the biggest rise in stock value of 1.18%. The companys price per share exploded on the 3rd May. The most reliable reason why this event took place was the promise made by Mr. Sarkozy recently during his election campaign. It states that he will continue investing even more in the development of atomic

energy industry in France in case he is re-elected for presidential position. Electricite de France is the second largest electric utility company in the world and it has 58 active nuclear reactors in France only. This makes the company the most attractive one to be invested in for those who expect that Mr. Sarkozy will fulfill his promise. In the future the companys price development will be determined by the success of President Sarkozys election campaign.

Figure 2: Electricite de France SAs price per share development during week 18, 2012. Retrieved from http://www.reuters.com

Legrand became the second biggest winner this week with an increase in stock price of 0.81%. Most probably, this small success has been reached via positive news coming from the confirmation made by the companys officials which states that quarterly sales has gone up flatly as demand in emerging economies and the United States helped offset lower growth in other mature markets (Alice Cannet, May 4, 2012). In a nutshell, the companys level of sales in developing economies increased above the expected level, which put Legrand's operating margin at 20.4 percent of sales, above analysts expectations. However, the corporations sales in Europe has decreased, which made the companys success look more modest in the eyes of investors. At the end, Legrands price has increased, while most of the companies listed in CAC 40 were forced to decrease their price per share.

Figure 3: Legrand's share price development during week 18, 2012. Retrieved from http://www.reuters.com

During this week Axa SA experienced the biggest fall in stock value of 14.79%. The companys price slipped on Friday right after the dividends payment of 0.69 EUR per share was made. It was quite a significant payment, because one share cost approximately 10 EUR only. Such a high return might have made shareholders think that there will be no dividend payments long enough time, therefore, it is the most convenient time to dispose of the shares now. The increase in supply of Axas shares in the market has led to a decrease in their price. However, if the company is able to pay to its shareholders, it will attract new investors undoubtedly, therefore it is very likely that Axas price will increase in the near future.

Figure 4: Legrand's price per share development during week 18, 2012. Retrieved from http://www.reuters.com

Overall, most of the companies have lost in price significantly, which put a pressure in the downwards direction on CAC 40 index. The main reason why it happened was general uncertainty in France caused by the elections. Investors prefer to wait until the countrys main future political direction will be determined so as to start investing the most promising industries. As soon as the new president will be elected, the investors will be more active again. Review by: Margarita Cernova, Yauheni Hanchyts, Viktorija Juskevica.