An insight into the CAC40 – Index Expert

The « CAC40 » (cotation assistée en continu) is the French stock market index. The market open at 9.00am till 17.35, following the pre-market hours from 7.15-9.00am. The CAC40 is undoubtedly and by a long chalk, the most followed up index of Paris Stock market.  So, let’s analyze what’s behind all this financial boiling and give a critical vision of this thermometer of the French economy as a whole.

As a matter of fact, the CAC40 progression reverberates investors’ expectations about the global performance of the French economy. The explanation is pretty simple: the CAC40 tracks the 40 listed French enterprises with the highest market capitalization. Some of the CAC40 companies are listed also in other stock exchanges like Amsterdam, or Italy (LVMH). Every companies’ stocks influence the Index proportionally to their weight over the market capitalization.

This principle enhances the height of the « BIG VALUES » of the CAC40. Thus, a variation of Total’s shares is way more impactful than another. In order to shrink from this pitfall, the biggest capitalizations aren’t allowed to weight more than 15% of the CAC 40. Nevertheless, several criticisms target the very composition of this index.  The CAC40 is said to be too concentrated, sector-specific and not so typical of the French economy. But another threat loom ahead. In 2009, the French economic magazine Alternatives Economiques denounced the fact that all of the CAC40 companies had ties with tax haven activities and that 16% of their subsidiaries were located in these same territories.

The CAC40 index underlies many financial products and in particular: SICAV, mutual fund trust, derivatives (warrants & options) and of course equity index funds (trackers). The very performance of these financial products goes along with the performance of the CAC 40.

The CAC40 doesn’t embed dividends, unlike the DAX.  At its current level, the CAC40 caps at 4815 points. Its all-time high was reached in the wake of the dotcom bubble, on September 2000 topping 6900 points. The CAC40 Total Return, which incorporates dividends reinvested, caps at 11368, above the actual level of German DAX30, 11040. French companies seem in great shape then.

The Index Value is calculated through this formula:

1000*(CAC40 Mkt Capt/(K*CAC40 Mkt Cap31 December 1987))

K is a coefficient of adjustment.

CAC40 Performance

CAC Composition



Soukaïna Bouziri, Master Student


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