Published on : 20 May 20203 min reading time
The stock market quotation includes the 40 most important French companies. Find out everything you need to know about the CAC 40.
How is the CAC 40 defined?
The CAC 40 or “continuous assisted listing” is a sort of stock market beacon that brings together the 40 largest French companies listed on the Paris stock exchange. These 40 companies are sorted among the 100 French companies with the highest trading volumes, defined by comparing them with their capital increase on Euronext Paris. The acronym CAC means that every day its value decreases or increases continuously. The number 40 indicates the number of French stocks that make up the index. The CAC 40 index is proclaimed every Monday until Friday, and is updated every 30 seconds from 9:00 a.m. to 5:30 p.m.
How is the CAC 40 calculated?
The calculation of the CAC 40 index is based on companies’ cash flow. This capitalization is obtained by adding the number of shares issued by the company and the price of each share on the market. The index is calculated according to the stock market securities available on the market and which can be unquestionably obtained by investors by eliminating: securities disposed of by the founders, securities indirectly or directly held by public authorities and the State. Securities held in connection with shareholding pacts deemed “stable” and shareholders as well as securities held in the context of control blocks and treasury stock are also excluded. However, as from 1 December 2003, in order to be able to rank on other major stock market indices, the CAC 40 opted for a floating market capitalisation system. On balance, only shares available for sale are considered in the calculation of the index. And a company’s capitalisation may not exceed 15% of the sum of the capitalisations in the calculation of the index, to ensure that the composition of the 40 companies included in the CAC 40 is representative.
What are the advantages of the CAC 40?
The CAC 40 offers a number of advantages for a company, especially the possibility of using the markets to sponsor itself through bond issues or the issue of new shares, capital increases. Members of the CAC 40 still raise many billions of euros on Euronext every year. CAC40 companies also enjoy a strong reputation in terms of financial communication, generally reflected in strong commercial spin-offs. Each majority shareholder of a CAC40-listed company also has the advantage of selling their shares while retaining their powers.