Economy and politics
France achieved a GDP of $2,599 billion in 2020, just behind the United Kingdom. The currency in France is the euro. The benchmark index of the French is the CAC 40, which summarizes the returns of the 40 largest companies in France.
Like the German economy, the French economy is dependent on the business cycle. The largest sector in France is cyclical consumption, which is defined in particular by companies from the luxury sector such as LVMH (Louis Vuitton Moët Hennessy), Kering and Hermès, as well as companies from the automotive industry such as Renault.
However, the industrial sector is also very important for France. Companies such as Schneider Electric, Airbus and Vinci are global players with great international influence.
All other sectors, such as non-cyclical consumption or financials, no longer play a major role in the market capitalizations of French companies.
France is a centrally governed country with close ties between business and the state. The French state is committed to employee rights and controlled capitalism. Politicians and employees have a say in many important decisions. For example, in the case of takeovers and mergers, employees can actively object and thus prevent the takeover. In the same way, the French state has also protected the Hermès company from hostile takeovers, for example.
The special tax problem in France for German shareholders:
The financial market in France is also regulated. Investors have to pay 0.3% of the purchase price as financial transaction tax on every share purchase. This also applies to German investors who buy their shares on a German stock exchange. In addition, the tax on dividends is higher than 25%. In 2021, investors will have to pay 26.5% withholding tax on dividends from France, of which only 12.8 percentage points are creditable against German capital gains tax. This results in a double burden for private investors from Germany. Instead of around 26.4% tax rate as for German dividends, one has to pay 39.4% tax on French dividends. In 2022, the withholding tax will at least be reduced to 25%. However, there are ways to avoid the tax. Unfortunately, a refund is only recommended for very large sums due to the high costs involved.
The largest companies
There, LVMH can be highlighted above all. By market capitalization, it is one of the largest companies in Europe, with a market capitalization of over 300 billion euros. According to market capitalization, it was at times even the most valuable company in Europe in 2021. Other large companies are Total (oil&gas), Sanofi (pharmaceuticals), Airbus (aerospace), Air Liquide (industrial) or AXA in the financial sector. The bank BNP Paribas is also very well known among many shareholders due to Consorsbank, which is listed in Germany.
Headquarters of the largest companies
BNP has its headquarters in the capital, Paris. AXA, Sanofi, Air Liquide and also L'Oréal are also based in Paris. Also the luxury brands LVMH and Hermès have their headquarters in Paris. You can see the power and prestige that Paris radiates beyond France.
The largest and most important trading centers
Euronext is a well-known trading center in France. However, Euronext is also an international stock exchange or exchange group with other trading venues in Amsterdam, Brussels, Dublin, Lisbon, Milan and Oslo.
Price development of the indices
The CAC 40 comprises the 40 French stock corporations with the highest turnover that are traded on Euronext Paris. The index level is determined exclusively on the basis of share prices. The three largest companies in the CAC 40 are LVMH, Sanofi and L'Oréal.
The CAC 40 was published for the first time on December 31, 1987 with a base value of 1,000 points. Currently, the benchmark index stands at just over 6,900 points.
Öffnungszeiten in Frankreich
The trading hours of Euronext in Paris are from 09:00 - 17:30 (CET).
