Peugeot Citroen removed from France's key stock index
Peugeot, left, and Citroen cars are parked in Paris, Friday, Sept. 7, 2012. (AP / Jacques Brinon)
Published Friday, September 7, 2012 8:43AM EDT
PARIS -- The Paris bourse will drop PSA Peugeot Citroen from its CAC-40 index of leading French companies after a dismal year for the carmaker, the exchange operator said.
It's a major blow for the company, which has been a part of the index since it was created in 1987, and is an iconic brand in France. Peugeot is considered one of the country's "national champions" -- the global companies based in France that help make the country an economic force -- but it has faltered in recent years under the weight of plummeting demand in Europe and increasing competition from Asia.
In the past year, as its troubles have piled up, Peugeot's stock has fallen more than 60 per cent. Market value is an important factor in building the CAC index; the committee that decides its composition also looks at the volume of stock traded on the exchange.
The index is supposed to include the 40 companies listed on the NYSE Euronext bourse in Paris that are most representative of the entire exchange. Its composition is evaluated at least four times a year, and major names have been dropped before. Air France-KLM, for instance, was removed in 2009.
NYSE Euronext said Thursday night that Solvay, a Belgium-based chemical company, will replace Peugeot. The change takes effect Sept. 24.
Peugeot said it would not comment. Solvay called the news an "important milestone" and said it reflected the company's economic power and growth potential.
While leaving the index won't have any material impact on Peugeot's day-to-day trading, it could mean that some tracker funds or pension funds may reduce their holdings of the stock.
It comes at a time when the loss-making company has been under pressure in France. Its plan to cut 8,000 jobs and close a major factory drew stiff criticism from President Francois Hollande's new Socialist administration and is under negotiation. Unions have also called for protests.