FRA 40 Explained: A Guide to France's Key Stock Market

Pepperstone
Market Analyst
11 Apr 2024
The FRA 40, also known as the CAC 40, is the benchmark stock market index of France. It tracks the performance of the 40 largest and most liquid companies listed on the Euronext Paris exchange, offering a comprehensive picture of the French economy.

FRA 40

The FRA 40 – or CAC 40 – (also known as FR40, FCHI, FCHI40) is the main benchmark French equity index. It tracks the performance of the 40 largest French companies listed on Euronext Paris. This market-capitalisation weighted index serves as a key indicator of the French economy's health and provides investors with exposure to a variety of French stocks..

Understanding the Index Composition

The index is rebalanced quarterly, with the ‘Steering Committee’ reviewing the 100 largest stock companies traded on the exchange, before choosing one class of each appropriate stock to enter the index. No single stock is permitted to have an index weighting of greater than 15%.

First calculated in 1987, Euronext provides a live CAC 40 price every 15 seconds with cash trading taking place daily between 9am and 5:30pm CET, on each working day. While the index is comprised solely of French listed and domiciled firms, the FRA 40 has long since seen the highest proportion of foreign ownership of any other main European equity index, owing to the multinational operations of many of its constituents.

Considering Your Risk Tolerance

When considering investing in French stocks, either through the FRA 40 or by selecting individual stocks, it's vital to assess your risk tolerance. The stock market inherently carries inherent risks, and some French stocks may be more volatile than others.

Contracts for Difference (CFDs)

Some investors utilise Contracts for Difference (CFDs) to trade the FRA 40 or individual French stocks. CFDs are complex financial instruments and carry a high degree of risk. It's essential to thoroughly understand CFDs before using them for trading.

Recent annual total returns for the index are below, though historical performance is no guarantee of future results.

Preview

Weightings for individual constituents of the index, at the time of writing, are as follows.

StockWeighting as of 01/07/2024
Lvmh10.79%
Totalenergies Se9.12%
Schneider Electric Se6.44%
L'oréal5.71%
Sanofi5.43%
Air Liquide5.36%
Airbus Se5.18%
Bnp Paribas4.29%
Safran4.08%
Hermès International4.01%
Axa3.60%
Essilorluxottica3.50%
Vinci3.19%
Stellantis N.v.2.97%
Danone2.06%
Capgemini Se1.81%
Saint-gobain1.75%
Pernod Ricard1.60%
Engie1.57%
Kering1.40%
Dassault Systèmes Se1.39%
Legrand1.38%
Michelin (Cgde)1.38%
Publicis Groupe S.a.1.29%
Stmicroelectronics N.v.1.28%
Orange1.11%
Société Générale1.01%
Veolia Environnement0.95%
Thales0.90%
Crédit Agricole S.a.0.82%
Arcelormittal0.64%
Edenred Se0.61%
Renault0.53%
Carrefour0.50%
Unibail-rodamco-westfield Se0.49%
Eurofins Scientific Se0.42%
Accor0.42%
Vivendi Se0.39%
Bouygues Sa0.38%
Teleperformance Se0.29%

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