The CAC 40 (Cotation Assistee en Continu) is a benchmark French stock market index. As the name suggests the index comprises of the 40 most significant values among the 100 highest market caps publicly traded on the Euronext Paris France’s securities market. The name comes from the Paris Bourse’s early automation system cotation Assistee en Continu (Continuous Assisted Quotation).
The CAC is one of the main national indices of the stock exchange group Euronext alongside Brussels BEL20, Lisbon’s PSI-20 and Amsterdam’s AEX.As France is one of Europe’s leading economies, the CAC is a strong indicator of the economic performance and health of Europe as a whole.
Many of the companies on the CAC are highly globalized with companies such as L’Oreal, Michelin, BNP Paribas and AXA amongst others having large operations in foreign markets.The weightings of companies in the CAC is capped at a maximum of 15% but at the moment sanofi, a pharmaceuticals company, is the most heavily weighted at just over 12%.
The CAC 40 index was launched on 31 December 1987 with base value of 1000. The index’s weighting system was changed from total market capitalization to free float market capitalization on 01 December 2003.
A quarterly review of the CAC 40 index composition is done by an independent index steering committee. The changes made by the review committee get effected after a minimum of two weeks. At each review date, the companies are then ranked according to free float market capitalization and share turnover over the prior 12 months of which 40 companies are selected from the top 100 companies in the ranking.
IMPORTANT POINTS ON CAC:
- The CAC futures contract is tradable from 6:01 – 19.59 (GMT), Monday to Friday.
- The CAC moves in increments of 0.50.
- The margin requirement for trading on CAC is usually about 2% (i.e. 50 to 1 leverage) with most brokers.
- The minimum trade size is 1 index.
- The currency of the CAC is the euro.