CAC 40

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CAC 40
Foundation	1987
Operator	Euronext
Exchanges	Euronext Paris
Constituents	40
Type	Large cap
Market cap	€ 1.023 trillion (2007)^[1]
Weighting method	Market value-weighted
Related indices	CAC Next 20, CAC Mid 100, CAC Small 90
Website	at euronext.com

The CAC 40 (French: CAC quarante IPA: /kak.ka.ʁɑ̃t/), which takes its name from the Paris Bourse's early automation system Cotation Assistée en Continu (Continuous Assisted Quotation), is a benchmark French stock market index. The index represents a capitalization-weighted measure of the 40 most significant values among the 100 highest market caps on the Paris Bourse (now Euronext Paris). It is one of the main national indices of the pan-European stock exchange group Euronext alongside Brussels' BEL20, Lisbon's PSI-20 and Amsterdam's AEX.

1 History
2 Rules
3 Holdings
4 Composition
5 References
6 See also
7 External links

History

Price evolution of the CAC 40 between 1987 and 2007

The CAC 40's base value of 1,000 was set on 31 December 1987, equivalent to a market capitalisation of 370,437,433,957.70 French francs.^[2] In common with many major world stock markets, its all-time high to date (6922.33 points) was reached at the peak of the dot-com bubble in September 2000.^[3] In 1 December 2003, the index's weighting system switched from being dependent on total market capitalisation to free float market cap only, in line with other leading indices.^[4]

Rules

Selection

The cac 40 index composition is reviewed quarterly by an independent Index Steering Committee (French: Conseil Scientifique).^[2] If any changes are made, they are effected a minimum of two weeks after the review meeting.^[2] At each review date, the companies listed on Euronext Paris are ranked according to free float market capitalisation and share turnover over the prior 12 months.^[5] From the top 100 companies in this ranking, forty are chosen to enter the CAC 40 such that it is "a relevant benchmark for portfolio management" and "a suitable underlying asset for derivatives products".^[5] If a company has more than one class of shares traded on the exchange, only the most actively traded of these will be accepted into the index (generally this will be the ordinary share).^[5]

Weighting

The CAC 40 is a market value-weighted index. The number of issued shares (used to calculate the market cap and hence the index weight) of a company is reviewed quarterly, on the third Friday of March, June, September and December.^[2] Since December 2003, the index weightings of companies in the index have been capped at 15% at each quarterly index review,^[5] but these range freely with share price subsequently. A capping factor is used to limit the weights to 15% (if necessary), and is reviewed annually by the Index Steering Committee on the third Friday of September.^[5]

Calculation

The index value I of the cac 40 index is calculated using the following formula:^[5]

$I_t = 1000\times\frac{\sum_{i=1}^N Q_{i,t}\,F_{i,t}\,f_{i,t}\,C_{i,t}\,}{K_t\,\sum_{i=1}^N Q_{i,0}\,C_{i,0}\,}$

with t the day of calculation; N the number of constituent shares in the index (usually 40); Q_i,t the number of shares of company i on day t; F_i,t the free float factor of share i; f_i,t the capping factor of share i (exactly 1 for all companies not subject to the 15% cap); C_i,t the price of share i on day t; Q_i,0 the number of shares of company i on the index base date; C_i,0 the price of equity i on the index base date; and K_t the "adjustment coefficient for base capitalization" on day t (reflecting the switch from the French franc to the Euro in 1999).

Holdings

Although the CAC 40 is almost exclusively composed of French-domiciled companies, about 45% of its listed shares are owned by foreign investors, more than any other main European index.^[6] German, Japanese, American and British investors are amongst the most significant holders of CAC 40 shares. This large percentage is due to the fact that CAC 40 companies are more international, or multinational, than any other European market. CAC 40 companies conduct over two thirds of their business and employ over two thirds of their workforce outside France.^[7]

Composition

A list of the CAC 40 companies, as of the quarterly review effected on 18 July 2007. No changes have been made to the index at the four subsequent reviews.^[2]

An Accor-owned Etap hotel in Saarbrücken, Germany.

An Air France Airbus A320-200 landing at London Heathrow Airport.

Carrefour hypermarket near Porte d'Auteuil, Paris.

A Michelin F1 tyre.

Total fuel station in Putlitz, Germany.

Company	ICB Sector	Ticker symbol	Index weighting (%)¹
Accor	hotels	AC	1.17
Air France-KLM	airlines	AF	0.59
Air Liquide	commodity chemicals	AI	2.25
Alcatel-Lucent	telecommunications equipment	ALU	1.21
Alstom	industrial machinery	ALO	1.50
ArcelorMittal	steel	MTP	4.12
AXA	full line insurance	CS	4.68
BNP Paribas	banks	BNP	6.45
Bouygues	heavy construction	EN	1.68
Capgemini	computer services	CAP	0.54
Carrefour	food retailers and wholesalers	CA	3.15
Crédit Agricole	banks	ACA	1.86
Dexia	banks	DX	1.02
EADS	aerospace	EAD	0.75
EDF	electricity	EDF	2.13
Essilor	medical supplies	EF	0.84
France Télécom	fixed line telecommunications	FTE	4.76
Gaz de France	gas distribution	GAZ	0.88
Groupe Danone	food products	BN	2.90
L'Oréal	personal products	OR	2.48
Lafarge	building materials and fixtures	LG	1.77
Lagardère	publishing	MMB	0.66
LVMH	clothing and accessories	MC	2.10
Michelin	tires	ML	1.09
Pernod Ricard	distillers and vintners	RI	1.32
PSA Peugeot Citroën	automobiles	UG	0.82
PPR	broadline retailers	PP	0.83
Renault	automobiles	RNO	1.86
Saint-Gobain	building materials and fixtures	SGO	2.36
Sanofi-Aventis	pharmaceuticals	SAN	6.65
Schneider Electric	electrical components and equipment	SU	2.20
Société Générale	banks	GLE	4.62
STMicroelectronics	semiconductors	STM	0.67
Suez	multiutilities	SZE	5.26
Total	integrated oil and gas	FP	12.41
Unibail-Rodamco	real estate investment trusts	UL	1.19
Vallourec	industrial machinery	VK	0.96
Veolia Environnement	water	VIE	2.36
Vinci	heavy construction	DG	2.47
Vivendi	broadcasting and entertainment	VIV	3.43