The Paris Stock Exchange had a record year in 2021

The appearance of variants of Covid-19 will not have deterred investors. The Paris Stock Exchange experienced meteoric growth in 2021, broke 20-year-old records, and even did better than other world markets, with an increase of nearly 30%.

The CAC 40 index has seen its best annual increase (+ 28.85%) for more than 20 years. In 2020, the flagship French index had on the contrary fallen by more than 7%.

Paris is doing better than Frankfurt (+ 15.79%), London (+ 14.30%), Milan (+ 23%), but also than the three main American indices.

Societe Generale on the rise

The recipe for this magic potion? “Central banks still accommodating, the strong economic recovery, the rebound in consumption”, summarizes Christopher Dembik, director of macroeconomic research at Saxo Bank.

Whatever the sector, companies have been able to taste this sweet beverage: at the top of the CAC 40, we find banking Société Générale (+ 77%), luxury giant Hermès (+ 75%), technology Capgemini ( + 70%), or the water and waste juggernaut Veolia (+ 67%).

“Exceptional second quarter results”

After a relaxation in January, the Parisian index experienced an almost linear progression until June. Cyclical companies, the most dependent on economic activity, such as banks, the automobile industry, industry, “have drawn on this first phase. We thought they would then run out of steam, but ultimately not, ”notes Chaguir Mandjee, portfolio manager at Tailor AM.

The courses were then euphorized by “exceptional second quarter results”, which were confirmed in the third quarter, supports Charles de Riedmatten, manager at Myria.

Slack shots

It was also at the beginning of November, following the publications of the companies, that the CAC 40 blew the ceiling of 6,944 points, its record dating from 2000, to peak at 7,183 points in mid-November, then to 7,201. points at the end of the year.

Investors have certainly experienced some slack. In mid-July, like at the end of November, the Covid-19 and its Delta and Omicron waves generated notable declines, including one of 4.75% in one session on November 26.

At the end of the summer, doubts about the strength of the Chinese recovery, symbolized by the abysmal indebtedness of the real estate giant Evergrande, rocked the markets. But “these declines were seen as opportunities to buy stocks at a low price,” said Christopher Dembik.

Public support

Meanwhile, central banks, from the US Federal Reserve to the European Central Bank, continued in 2021 to massively support economies by injecting tens of billions of euros each month into the financial system, contributing to the exceptional recovery this year. year.

With a lot of money available, investors have little choice but stocks: “We expected to see a sharp rise in interest rates for the States, that did not happen”, notes Florence Barjou, investment manager at Lyxor.

When interest rates fall, investors turn more to equities, which are riskier than bonds but more profitable. The high inflation of the moment contributes to this phenomenon, because it mechanically erodes the gains, by definition fixed, of bonds.

What trends for 2022?

But by going too far, don’t investors risk burning their wings? Inflation has reached record highs for decades in the United States and the euro area, prompting central banks to initiate cuts in their support measures. In addition, the normalization of country growth and business results calls for caution.

Few observers see the ACC repeat such a performance in 2022. And this while health uncertainty persists, depending on the new variants. “The year is nervous. The indices have risen well, no one wants to be the first to sell, but no one wants to be the last either ”if a period of correction sets in, analyzes Alexandre Neuvy, manager at Amplegest.

He underlines “the need to breathe” after the increases of 2021, and the fact that not everyone participated in the party.

Seven CAC stocks ended in negative, the worst performance going to Worldline (-38%), sanctioned at the end of the year for bad choices according to investors.