The CAC 40 (CAC quarante) is a French stock market index. It is a capitalization-weighted index that measures the performance of the 40 largest, publicly traded companies on the Euronext Paris France’s securities market.
The CAC is one of the main national indices of the stock exchange group Euronext alongside Brussels’ BEL20, Lisbon’s PSI-20 and Amsterdam’s AEX.
As France is one of Europe’s leading economies, the CAC is a strong indicator of the economic performance and health of Europe as a whole.
Companies of the CAC
|Sanofi (12.19%)||GDF Suez (2.84%)||Arcelor Mittal (1.69%)||Alstom (0.96%)|
|Total (11.96%)||Vivendi (2.77%)||PPR (1.64%)||Solway (0.94%)|
|BNP Paribas (6.24%)||Pernod Ricard (2.52%)||Carrefour (1.54%)||Gemalto (0.76%)|
|LVMH (5.02%)||Vinci (2.42%)||Lafarge (1.25%)||Capgemini (0.70%)|
|Air Liquide (4.08%)||Unibail-Rodamco (2.31%)||Publicis (1.19%)||Accor (0.65%)|
|Groupe Danone (4.07%)||Orange (2.27%)||Technip (1.18%)||Bouygues (0.60%)|
|Schneider Electric (4.04%)||Essilor (2.05%)||Legrand (1.14%)||Vallourec (0.58%)|
|L’Oreal (3.65%)||EADS (1.89%)||Renault (1.10%)||EDF (0.57%)|
|AXA (3.40%)||Michelin (1.85%)||Safran (1.08%)||STMicroelectronics (0.54%)|
|Société Générale (3.04%)||Saint-Gobain (1.78%)||Crédit Agricole (1.02%)||Veolia Environnement (0.44%)|
Many of the companies on the CAC are highly globalized with companies such as L’Oreal, Michelin, BNP Paribas and AXA amongst others having large operations in foreign markets. In fact, CAC companies as a whole conduct more than two-thirds of their business overseas and employ over two-thirds of their workforce outside of France.*Weightings accurate as of January 2013
This globalization can be seen in its shareholders. 45% of the listed shares are held in foreign hands with German, American, British and Japanese investors being the most significant. This is much larger than any other European stock index.
The weightings of companies in the CAC is capped at a maximum of 15% but at the moment Sanofi, a pharmaceuticals company, is the most heavily weighted at just over 12%.
Admission to the CAC
Every quarter the CAC 40 is reviewed by the Conseil Scientifique – an independent Index Steering Committee. At each review, the companies listed on the Euronext Paris are ranked from highest market capitalization to lowest.
This is a free-float method so only shares held in public hands are included. From the top 100 companies from this ranking, forty are chosen to enter the CAC so that it is a relevant benchmark of French equities and portfolio management.
The CAC has remained unchanged since December 2011.
The Value of the CAC
The base value of the CAC was set at 1,000 on 31st December 1987. This base value of 1,000 was the equivalent of a total market capitalization of 370,437,433,957.70
French francs. The CAC’s all-time high was reached during the peak of the dot-com bubble in September 2000 when it hit 6,922 points.
In March 2009, like most indices, we saw the CAC fall to its lowest level (2,500) in 6 years on the back of the credit crunch. The CAC has since bounced back and is currently trading around the 4,200 level.
Historical performance of the CAC
A one-day line chart graphing the performance of the DAX from mid-2008 to September 2013.
Things to Remember When Trading the CAC
- The CAC futures contract is tradable from 6:01 – 19:59 (GMT), Monday to Friday.
- The CAC moves in increments of 0.50.
- The margin requirement for trading the CAC is usually about 2% (i.e. 50 to 1 leverage) with most brokers.
- The minimum trade size is 1 index.
- The currency of the CAC is the euro.
So let’s say we want to BUY 1 index of the CAC and it is currently priced at 4,200 and we have a Euro denominated trading account:
The margin (or funds) we would need to put up to open this position would be €84.
(€4,200 (price of CAC) X 2% (margin requirement) = €84)
This amount can be seen in the ‘used margin’ section on our trading platform.
If we have an account in a different base currency such as US dollar, our margin remains 2% but our trading platform will automatically convert the €84 to US dollars.
So say the EUR/USD rate is 1.3500. We then see approximately $113 in the ‘used margin’ section on our US dollar account.
Every move in the CAC is 0.50 cent (euro) so in our example, if we bought 1 index and the CAC rises from 4,200.00 to 4,235.00 we make a profit of €35.00 (or $47.25 at our EUR/USD exchange rate).