For the first time in nearly two years, the London Stock Exchange has surpassed the Paris Stock Exchange as Europe’s most valuable exchange. The total value of the businesses listed on the London Stock Exchange was $3.18tn, while the total value of businesses listed on the Paris Stock Exchange was $3.13tn, according to Bloomberg’s data. Even though the valuations of both exchanges have since shifted and are close in value, this is still considered a milestone by experts.
The French market was negatively impacted by uncertainty surrounding the country’s election, while the UK stock market was recovering after being underperforming for several years. The London Stock Exchange was previously Europe’s biggest stock market for years until November 2022 when it was overtaken. At the time, analysts blamed the fallout from former Prime Minister Liz Truss’ mini-Budget, a weak pound, recession fears, and Brexit for the exchange’s poor performance.
Investors generally dislike uncertainty, and there are uncertainties surrounding France’s snap election called by President Emmanuel Macron earlier this month, following a victory for his right-wing National Rally rival Marine Le Pen in European elections. Hargreaves Lansdown’s Susannah Streeter stated that Le Pen’s manifesto contains “unfunded spending,” which could affect the value of bonds. Financial markets often react poorly when they are unsure where the government’s pledges will come from since these pledges impact the value of government bonds.
The UK’s Labour Party, which is leading in the polls ahead of the general election, is attempting to convince investors that it is a “safe pair of hands.” Meanwhile, the Conservative Party is trying to convince investors of its approach. Chancellor Jeremy Hunt said, “I think London’s stock market demise is massively overstated” and “We do have challenges, and we’re addressing those challenges.”
One of the largest challenges facing the LSE in the last decade has been its struggle to attract investors and companies compared to American exchanges, with numerous UK firms selecting to list on US exchanges over UK ones. However, the UK index has increased since the start of this year, partly due to a better understanding of interest rates. Mould suggested that investors may be overvaluing US companies and undervaluing UK ones, as British stocks are still less expensive than American stocks relative to their earnings
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