Shares in Paris have overtaken those in London in dollar terms as they erase a $1.4 trillion (£1.2 trillion) gap since the Brexit vote, Bloomberg calculations revealed. The pound’s plunge against the dollar, recession worries hitting UK-focused stocks and a rebound in French luxury heavyweights including LVMH have prompted the reversal. London’s combined market capitalization is $2.821 trillion versus $2.823 trillion for French stocks, according to Bloomberg. It marks a huge reversal of fortunes over the past decade, with UK stocks almost $2 trillion bigger in dollar terms than their French rivals at one point in 2014, when the pound was much stronger. London has gained a reputation as an “unloved” market in recent years as economic distress and persistent political uncertainty have deterred investors. While the FTSE 100 looks set to end the year as one of the best global performers in a bleak year for markets, the domestic FTSE 250 is set to lose 18% in sterling terms in 2022. In addition, the dollar value of UK shares has been hit by sterling sinking more than 13% against the dollar this year, undermined by growing recession fears and the market’s reaction to ‘Trussonomics’. In comparison, the euro has fallen 9% against the dollar. Graham Secker, equity strategist at Morgan Stanley, warned that UK stocks could suffer next year as the economic landscape worsens significantly. The Wall Street bank expects the UK to suffer a deeper recession than any other European economy in 2023, followed by a weak recovery in 2024. “Following its best relative performance in almost 30 years, the macroeconomic backdrop looks set to become less favorable for the FTSE 100 next year,” Mr Secker said. “According to our economists’ forecasts, the UK is likely to see the largest economic contraction of any major economy next year as the cost of living crisis deepens and is reinforced by tighter fiscal policy.” Meanwhile, French shares have rallied in recent months, led by luxury goods giant LVMH, the most valuable company on the Paris stock exchange. The CAC 40 – the blue-chip index in Paris – has risen 17% since the end of September and is currently trading at a seven-month high.
