Despite initial fears that Brexit would undermine London’s standing as a global financial center, recent developments have reestablished the London Stock Exchange (LSE) as the most important hub for stock trading in Europe.
The Paris Stock Exchange, while still significant, has faced challenges that have allowed London to overtake it in terms of market capitalization.
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Impact of the European Elections
The Paris Stock Exchange experienced significant declines following the European elections of June 2024. President Macron’s announcement of early elections for the lower house of parliament further exacerbated the situation.
These political uncertainties led to a considerable downturn in the French financial markets, negating all the gains made in the first five months of the year.
London surpasses Paris in market capitalization
The primary reason for London’s resurgence as the richest stock exchange in Europe is the crisis within the French financial markets post-European elections.
Bloomberg reports that the market capitalization of the London Stock Exchange has reached $3,180 billion, surpassing the $3,130 billion valuation of the Paris Stock Exchange.
London’s financial markets have demonstrated resilience, bouncing back from Brexit-induced instability. The recent listing of Raspberry Pi, a notable technology company, has further strengthened London’s position.
This listing highlights the city’s ongoing appeal as a global financial hub, attracting significant investments such as those from the semiconductor company Arm.
Paris Stock Exchange: political turmoil and financial instability
In contrast, the Paris Stock Exchange has struggled due to political instability. The European elections saw Marine Le Pen’s far-right Rassemblement National party secure over 30% of the votes, significantly outperforming President Macron’s party, Renaissance.
This political shift led to Macron dissolving the lower house of parliament and calling for early elections, heightening the uncertainty and instability in the French markets.
European stock markets initially reacted negatively to the election results, particularly the rise of far-right parties in Germany and France. While most markets recovered some of their losses in the subsequent days, the Paris Stock Exchange continued to decline.
The CAC 40, France’s primary stock index, fell by 6.2% in one week, effectively wiping out the gains accumulated since the beginning of 2024.
