Paris Bourse Becomes 2nd Major Market to Regain Pre-Crash Level
The French stock market bubbled back to pre-crash levels Friday as traders celebrated recent sparkling company results and ignored Thursday’s news of a huge August trade deficit.
The Paris bourse, outperforming the stagnant Frankfurt and the nervous London and New York stock exchanges, became only the second of the world’s major stock markets after Tokyo to regain levels prevailing before “Black Monday” on Oct. 19, 1987.
Friday’s CAC index, tracking 244 companies that make up the bulk of the French market, reached 370.7 on Friday, 47.5% above its January post-crash low.
Still Below Record
Traders said the CAC index finally broke through the pre-October crash level on Thursday, but late trading saw shares slump after the Foreign Trade Ministry revealed that August’s deficit grew to 9 billion francs ($1.4 billion) from 4 billion francs ($635 million) in July.
French shares remain below the all-time peak of March, 1987, when the CAC hit a record 460.4, and the bourse closed Friday still about 20% below that high.
Brokers said shares were also aided by this week’s confident government economic forecasts, with 1988 expansion projected at a healthy 3.2% this year and 2.6% in 1989. Business investment will be nearly doubled at 9% this year against 4.9% in 1987, and officials also calculated that company profit margins would return to levels last seen before the first oil price shock in the 1970s.