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A financial markets historical perspective : The French stock market index CAC 40

A lesson about the French stock market.
by

Jérémy Morvan

on 16 July 2013

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Transcript of A financial markets historical perspective : The French stock market index CAC 40

A historical perspective
of financial markets :
the French stock market index CAC40

"The CAC 40, the most widely-used indicator of the Paris market, reflects the performance of the 40 largest equities listed in France, measured by free-float market capitalisation and liquidity. Its movements are closely correlated with trends in the market as a whole.
It serves as the underlying for futures and options traded on Liffe, NYSE Euronext’s leading international derivatives business and it serves as an underlying for ETF’s and structured products."
CAC 40 Index Factsheet , 01 JAN 2013
Available on https://indices.nyx.com
First Gulf War
2 August 1990
28 February 1991
The beginning
of the Internet Bubble
(1996)
The Asian
financial crisis
(1997)
The Russian
financial crisis
(1998)
The September 11 attacks
The subprime mortgage crisis
The European sovereign-debt crisis
Historical
highest price
Closing price : 6,922.33 points
(September, the 4th, 2000)
https://indices.nyx.com/fr/products/indices/FR0003500008-XPAR
Few major stock indices
Dow Jones industrial Average, S&P 500, Nasdaq
FTSE 30
CAC40, SBF120, SBF250
DAX30
Nikkey 225, Topix
DJS600, DJES 50
What is the CAC40 ?
More information
What is a stock index ?
A stock index is a portfolio of securities intended to be representative of the market trend. This combination of stocks is used as a benchmark for investors to assess the return and risk of their stock portfolios

An index is a kind of mathematical construct, so it may not be invested in directly. It is complex to replicate it.

Computing, distributing indices is a very dynamic financial business. Many financial information firms offer indices about stocks, bonds, utilities, commodities, derivatives etc.

But national indices are the most popular. Indeed, they represent the performance of the stock market of a given nation. So they reflect investors sentiment on the state of a economy.
1990
1996
1997
1998
2000
2001
2007
2008
2010
2011
2012
To conclude...
Jérémy Morvan
Assistant professor
http://www.iae.univ-brest.fr
Why did stock market go down ?
Why did stock market crash ?
Clue
Why did stock market go up ?
Clue
Clue
http://en.wikipedia.org/wiki/Schumpeter
What is a subprime lending ?
Why did stock market go down from 2007 ?
Clue
Why did stock market go down (again) from 2010 ?
Clue
Stocks are risky assets
Why did stock market crash ?
Clue
Why did stock market crash ?
Clue

commodities
Reading suggestions
Greenspan A.
The Age of Turbulence
2010
Reinhart C. H. and Rogoff K. S.
This time is different
2007
Financial Crisis in Thailand Caused by Speculative Attack, Khan Academy (6'33)


Why did stock market crash ?
Mortgage-backed securities - Part I, Khan Academy (7'57)
Why Is Europe Having a Sovereign Debt Crisis Now?, St Louis Fed (8'20)
The composition of a stock index evolves over time
Major national indices don't reflect national economy but reflect the wealth of major companies... invested in many countries all around the world
National GDP growth is not necessarily correlated with the growth of corporate profits
National debt
Full transcript