French stocks could potentially be on track to experience their worst yearly performance since the global financial crisis of 2007-2008.
This has mainly been exacerbated by increased investor anxieties about the political situation of the country, along with the possibility of tariffs, in case the EU-China trade war heats up, or tensions between the EU and the US worsen.
The ongoing cost of living crisis seen in many parts of Europe, as well as France, along with high interest rates and soaring inflation has also contributed to the French economy seeing relatively subdued growth compared to some of its European counterparts.
This has gone a long way in discouraging both domestic and foreign investors from investing in French stocks. A rising budget deficit and the snap elections seen earlier this year have also contributed to this.
The CAC 40 index has already fallen 3% year-to-date, although it did gain 2.78% this month, as well as 1.25% in the past week.
In comparison, other major European indexes such as the Stoxx 50 surged 7.96% year-to-date, while the Stoxx 600 index jumped 5.42% so far this year. The German DAX index has also grown 18.46% year-to-date.
One of the major reasons for the CAC 40’s lacklustre performance is because of the global luxury sector struggling for the majority of 2024, following short-lived gains at the beginning of the year.
Since luxury companies form a large part of the CAC 40, this sluggish performance has significantly impacted the index, especially through companies such as LVMH and Kering.
LVMH has fallen 13.83% this year, whereas Kering plunged 45.90%. However, another major French company, Hermès, has bucked this trend by advancing 20.42% year-to-date.
