2024-03-17 21:06:49
These stock indices allow investors to manage their stock portfolio. The two best-known stock market indices in Paris are the CAC 40 and the SBF 120. The first is made up of the 40 stocks which represent the largest French capitalizations. From a level of 2000 on January 1st, it reached the 8000 points mark, a peak in its history! And in the opinion of even market experts “the trend remains favorable”.
Government, employers and experts glory, loudly and without restraint, in these records calling, like everyday business, to “celebrate a performance which should be congratulated” (Les Échos March 8, 2024). Above all, they pretend to consider that the financial health displayed by this stock market index reflects the overall evolution of the French economy and finance. These records would reflect the return of the competitiveness of the national production site, show the attractiveness of the territory and express the resilience of our productive structures.
Reversing the tale for naive stock marketers
Except that the strategy of the “large French groups” is the opposite of this tale for naive stock marketers. The development of these large groups is taking place internationally to the detriment of growth in France: 62% of their workforce is in their subsidiaries abroad compared to only 38% for the Germans – which we often cited as an example. These CAC giants carry out three quarters of their activity abroad. By encouraging the development of low-cost production, relocation and importation were encouraged.
Attractiveness, if there is any, can only be that which shareholders appreciate, thanks to a generous dividend distribution and share buyback policy. The main French groups made 153.6 billion euros in profits last year. Dividends, 67.8 billion euros, as well as share buybacks, 30.1 billion, reach unprecedented amounts.
For the most serious analysts, company results do not justify the valuations reached by shares. We would be in a configuration which would be reminiscent of that which prevailed at the beginning of 2000. The stock market record on Wall Street in 1999, driven by internet stocks, would result a few months later in the March crash. 2000 due to the collapse of technology stocks.
The preliminary phase of a financial crisis?
This is another configuration which in 2008 caused an influx of liquidity and led banks to use this liquidity on the stock market to the detriment of employment. This had caused financial inflation perceptible in the surge in stock prices and had maintained wage deflation. The return to reality was brutal. The exceptional profits expected by financiers were not forthcoming and share prices plummeted at the beginning of April.
With the current stock market records, are we not experiencing the preliminary phase of a financial crisis, now rampant, but which promises to be more serious and more global than the previous one? The fall will be all the harder as the stock market excesses have been significant.
The slump in French growth, the lack of investment, the first declines in employment, and the external deficit in manufactured goods make sense in this context. France and Europe will only escape the trap by asking the question of another use of money: less financing to maintain the fire of finance, more credit for the development of employment, Education, health, culture and a real response to social needs is the new vision to be promoted urgently.
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