The Cotation Assistee en Continu (CAC) 40 meaning Continuous Assisted Quotation for 40 stocks is the market capitalization weighted benchmark stock market index for France with a base value of 1000 set on 31st December 1987.
The index is calculated using the Weighted Average Market Capitalization methodology where the price multiplied by the free float gives the market capitalization of its constituents. The base value of the index is 1000 on 31st December 1987. The weightage of each company is arrived at by dividing the market capitalization of each company with the total market capitalization of all the 40 companies. The larger the market weightage of the company the larger is the impact due to 1% change in its price on the index.
The index composition is reviewed on a quarterly basis after the close of the third Friday of March, June, September and December, from stocks listed on the Euronext Paris stock exchange by an independent Index Steering Committee named Conseil Scientific. If any changes are made they are implemented in the index after a minimum period of two weeks. The companies are required to have a free float adjusted annual velocity of at least 20% as the eligibility criteria for selection.
Healthcare constitutes 13.2% followed by Industrial Services at 10.59%, Banks at 10.36%, Oil and Gas at 9.98%, Personal and Household Goods at 8.87%, Construction and materials at7.88%, Food and Beverage at 5.57%, Automobiles and Parts at 4.63%, Insurance at 4.6%, Utilities at 3.96%, Media at 3.91%, Telecommunications at 2.92%, Retail at 2.69%, Real Estate at 2.48%, Technology at 2.37%, Travel and Leisure at 0.95%, and Basic Resources at 0.51% for the sector allocation in the index.
The CAC 40 has given a return of 15.79% on a year on year basis and has gained 9.44% year to date. The index reached an all-time high of 6922.33 during the dot com bubble in September 2000. The index has a Price to Earnings ratio of 22 in the current scenario. Sanofi company has the highest weightage of 10.9% in the index followed by Total with a weightage of 9.5%, BNP Paribas with 6.04%, LVMH with 4.62%, AXA at 4.6% and L’OREAL at 4.24% while others have less than 4% weightage each in the index.
Table 1. CAC 40 Constituents
