The milestone of 400 billion euros (LVMH is worth 430 billion dollars) is symbolic but constitutes an all the more impressive record for a European company as the luxury group is the only company on the Old Continent to be among the 20 largest. global capitalizations.
The capitalization of a company designates the amount that would have to be spent to buy all of the existing shares.
Of the top 100 valuations, 61 are American, according to a census carried out by the firm EY at the end of December 2022. France, Switzerland and the United Kingdom are represented by 12 companies in this list.
The firm does not include any German company, the chemical group Linde having announced in October its desire to leave the Dax to be listed only in the United States.
Only 15 companies from China, yet the world's second largest economy, are included in this ranking, a low figure due to a lack of investor confidence in Chinese assets, particularly subject to government interference.
In addition to the Swiss agrifood giant Nestlé, from which LVMH took over the position of the largest European capitalization during the second half of 2022, several companies in the health sector occupy the top of the European basket: Novo Nordisk, Roche, AstraZeneca , Novartis.
Some still benefit from a "Covid effect".
In addition to the Swiss agri-food giant Nestlé, from which LVMH took over the position of the largest European capitalization during the second half of 2022, several companies in the health sector such as AstraZeneca occupy the top of the European basket © Jonathan NACKSTRAND / AFP/Archives
In its study, EY notes that "the importance of Europe on global stock markets has been declining for years", pointing out that before the 2008 financial crisis, "46 of the 100 most valuable companies in the world were European , they are now only 15".
Giant crushers
European companies pale in comparison to the American giants Apple (2.120 billion dollars), Microsoft (1.750 billion), the parent company of Google, Alphabet (1.190 billion) or Amazon (970 billion).
A valuation gap which is mainly explained by the size of the companies: LVMH garnered 64 billion euros in revenue in 2021, while Apple's turnover approached 400 billion dollars for its staggered 2021 financial year. /2022.
The attractiveness of Wall Street, where "the full spectrum of international investors is accessible", also plays a role, according to Christopher Dembik, director of macroeconomic research at Saxo Bank.
“There are more flows oriented towards the American market”.
The CEO of the French luxury group LVMH Bernard Arnault in Paris, April 21, 2022 © Eric PIERMONT / AFP/Archives
An observation not entirely shared by Michael Green of Simplify Asset Management who underlines that "on the whole, the markets are global today" and that, proportionally to income, "the valuation gaps between Europe and the United States have widened reduced and disappeared."
The most frequent share buyback programs in the United States, which support stock market prices, are also to be taken into account for Michael Hewson, analyst at CMC Markets.
"King of the Jungle"
"There is also a phenomenon of mimicry of asset managers who systematically have a fairly large exposure to the American market", the percentage of American assets in a portfolio "can go up to 30% to 50%, including at of European managers", assures Christopher Dembik.
For him, the only European sector that can claim to catch up with American capitalizations is luxury, with "resilience regardless of the nature of the crisis" and "phenomenal stock market increases over the past ten years".
Since 2020, the LVMH share has been driven by government and central bank measures to help the economy, by the increase in its sales despite soaring prices and, more recently, by the economic reopening of China.
For Luca Solca, Bernstein analyst specializing in luxury, LVMH's progress "shows that luxury is one of the few sectors where Europe is a leader".
And "LVMH is more and more the king of the jungle", he adds.
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© 2023 AFP