CAC 40 Index
The French CAC 40 Index (Cotation Assistée en Continu, or continuous assisted trading in English) is the main indicator for the performance of the price of major France-listed companies on the Paris Stock Exchange, Euronext Paris (formerly known as the Paris Bourse).
The CAC 40 was launched in December 1987, as was the German DAX Index, using a starting price of 1000. It is widely used as the basis for financial products, including spread bets, CFDs, ETFs, index tracking funds, futures and options contracts, and structured products.
Amongst the companies included in the CAC 40 are globally recognised names such as the car manufacturer Renault, personal care company L’Oréal and fashion titans Hermès and LVMH. In fact, over recent years the index has become somewhat dominated by the fashion industry.
Despite the heavy French focus, it is worthwhile to know that an unusually high proportion of shares in CAC 40 companies are owned by overseas (i.e. non-French) shareholders. This reflects both the global reach of the companies and the fact that so much of their revenue is raised, and staff are employed, elsewhere than France itself.
The price of the index is calculated every 15 seconds.. It is something of a complicated formula to calculate the actual index price, but is essentially based on the current price multipled by the number of shares.
If a company has multiple classes of shares in issue the most highly-traded share is the one used in the calculation.
The component companies are determined by their market capitalisation and turnover of shares over the preceding 12 months, so liquidity is also a factor.
The CAC 40 is then selected from the top 100 companies listed (in the main, see below) in France according to the criteria described.
The index is re-balanced on a quarterly basis by a review committee.
Though the vast majority of the CAC 40 membership is listed and domiciled in Paris, a small number of constituents are based in Luxembourg or the Netherlands, or listed in Amsterdam.
CAC 40 Index ETFs
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