Paris has lost its place as the largest European stock market back to London. The new elections scheduled for the end of June by President Emmanuel Macron have weighed down French stock values. In particular, banks holding many French government bonds lost about 10 percent in value over the past week. These include Société Générale, BNP Paribas, and Credit Agricole.

Overall, the market capitalization of companies listed in Paris fell by about 258 billion dollar last week, according to the news agency Bloomberg.

London Reaches 3,18 Trillion Dollar

The total value of French stocks is now 3,13 trillion dollar, slightly behind the United Kingdom's 3,18 trillion dollar.

«We are in a phase where there will be no certainties for three to four weeks, and unfortunately, the market could become more unstable,» said Alberto Tocchio, a portfolio manager at Kairos Partners.

The Paris leading index CAC-40 has given up all its gains for 2024. About a month ago, it reached a record high of 8,259 points. It is currently trading at 7,534 points.

Britain Likely to Face Government Change

But Britain is also in the middle of an election campaign. In the election for the House of Commons set by Prime Minister Rishi Sunak for July 4, a clear victory for the opposition Labour Party under Keir Starmer is expected. This would likely end the Conservative Tories' 14-year rule.

However, uncertainty is limited here. Labour's party manifesto is comparatively business-friendly compared to previous election programs.

Good Sector Profile of British Stocks

Additionally, the prospects of a global economic recovery and increasing merger activities have had a more positive impact on the sometimes very internationally oriented stocks listed on the LSE.

«We like British stocks for valuation reasons, but also to diversify the portfolio due to their attractive sector profile,» says Ulrich Urbahn of Berenberg Bank. «Moreover, political uncertainty seems to be greater elsewhere, at least for the moment.»

Record High in May

The FTSE 100 index reached an all-time high in May, driven by export-dependent stocks like Shell, Unilever, and engine manufacturer Rolls-Royce. It has performed much better over the past three months than the Euro Stoxx 50 index.

In global comparison, the United Kingdom is now the sixth-largest stock market. The top spots are held by the USA, mainland China with the Shanghai and Shenzhen markets, and Japan. At the beginning of the year, India already displaced Hong Kong from fourth place.