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Europe 2020A Driver To Global Growth
September 2014
1. New Perspectives for Europe
1.1 Back to economic growth GDP growth forecasts in France, Germany, Italy, Spain.
2014 PMI (Purchasing Managers Index) improvements: euro area composite PMIreached 52.8 in June in a growing trend. New orders rose to its highestsince May 2011, driven by the service sector.
Recovery in the €urozone, boosted by easier financial conditions,better exports, a pick-up in investment and some fiscal drift.
Economic growth in Europe
Source: IMF, April 2014
2013 2014 2015 2019
FRANCE 0,3 1 1,5 1,9Germany 0,5 1,7 1,6 1,3
Spain -1,2 0,9 1 1,3
Italy -1,9 0,6 1,1 0,9
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1. New Perspectives for Europe
Banking Union boost euro area real GDP by 1% by 2017,offering a fundamental support to risky assets in the region.
The Asset Quality Review (AQR) of bank balance sheets(October 2014) is likely to be a key factor in the recovery of credit.
BankingUnion
1.2 The EU economic outlooks are strengthening
Structural economic reforms are gaining momentum:reducing deleveraging, financial fragmentation, adjustment ofexternal imbalances and uncertainty is noticeable.
Public deficits are expected to continue falling in 2014,at a similar pace to 2013.
StructuralReforms
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ECBNew Monetary
Policy
In addition to conventional measures, the ECB took unconventionalaction to fight the threat of “lowflation”.
a negative deposit rate (-0.10%), a series of targeted LTROs at afixed rate, and the preparation of an ABS purchase program.
31 French Companies are Among WorldLeaders in their Respective Industries
Top Cities Worldwide in Terms of Presenceof International Companies
SECTOR COMPANYAerospatial & Defence EADS
BanksBNP Paribas
Société généraleCrédit Agricole
Beverages Pernod RicardChemicals Air Liquide
Construction & MaterialsVinci
Saint GobainElectricity EDFElectronic & electrical equipment Schneider ElectricFixed line telecommunications France TelecomFood & drug retailers CarrefourFood producers DanoneGas, water & multiutilities GDF SuezGeneral retailers PPRMedia VivendiNonlife insurance AxaOil & gas producers Total
Personal goods
LVMHL’Oréal
Christian DiorHermes International
Pharmaceuticals & biotechnology Sanofi-AventisReal estate investment trusts Unibail-Rodamco Source: Fortune Global 500, 2013
Rank City CountryN° of
Global 500companies
Revenues($millions)
1 Tokyo Japan 47 2,268642 Beijing China 41 2,222,366
3 Paris FRANCE 23 1,285,432
4 London UK 18 1,170,2705 New York USA 18 955,2916 Seoul South Corea 12 640,5867 Osaka Japan 8 376,6078 Toronto Canada 7 197,2949 Houston USA 6 377,7029 Moscow Russia 6 248,0349 Madrid Spain 6 323,3459 Zurich Switzerland 6 221,8189 Mumbai India 6 207,156
14 Amsterdam Netherlands 5 261,93314 Shanghai China 5 165,75116 Munich Germany 4 386,35516 Rome Italy 4 283,454
2. Investment Opportunities
2.1 Paris an international business Center
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2. Investment Opportunities
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Rank Bank Country Total Assets(€billions)
Core Tier 1Ratio
1 HSBC Holdings UK 1,938 13.6%
2 BNP Paribas France 1,800 10.3%
3 Crédit Agricole France 1,706 12.6%
4 Deutsche Bank Germany 1,649 9.7%5 Barclays UK 1,577 13.2%6 Royal Bank of Scotland UK 1,236 10.9%7 Société Générale France 1,235 11.3%8 Santander Group Spain 1,134 11.7%9 Groupe BPCE France 1,124 11.4%
10 ING Group Netherlands 1,081 11.7%11 Lloyds Banking Group UK 1,018 14.0%12 Unicredit Group Italy 846 9.6%13 UBS Switzerland 823 15.4%14 Credit Suisse Group Switzerland 712 15.7%15 Rabobank Group Netherlands 674 13.5%16 Nordea Sweden 630 14.9%17 Intesa Sanpaolo Italy 626 11.3%
18 BBVA Spain 600 12.2%
19 Commerzbank Germany 550 13.1%
20 Standard Chartered UK 489 11.8%
2.1 Paris an international business CenterFour French banks are in the European top 20 largest banks
Source: Banks Daily, 2013Balancesheet at Dec. 31, 2013
2.2 Deep and Sound Equity Markets :Euronext, the largest stock exchange in the €urozone
Market Capitalisation(in €bn, April 2014)
Value of Equity Trading(in €bn, end 2013)
Source: FESE, 2014
2. Investment Opportunities
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European and French assets undervalued by the Market European corporate attractively valued considering that: The ECB should remain accommodative. Lower Price-to-Book* ratio compared to the US (eurozone and peripheral valuations
are still attractive compared to the US which is trading at 2.6x book value whereasthe eurozone is trading at 1.5x). * Used to evaluate the company value by comparing its book value to its market value.
The Ratio Price to Book of French CAC 40 companies is less than 1,reflecting their under pricing by the market.
Goods and Consumer Services
CAC 40 Listed Companies Under Priced
Energy,Raw materials
00
Industries and Building Banks, Insurances Technologies
Ratio P/B = 1Ratio P/B
Ratio price to book
2. Investment Opportunities
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Strong market performance offers higher valuations for companieswishing to access financial markets.
Decreased implicit volatility illustrates a more stabilized environmentfavorable to monitor an IPO pricing.
Enternext IPOs(number of IPOs)
Euronext Stock IndicesPerformance
2013 Euronext IPO’ PerformancePositive momentum on Euronext IPOs
AEX 25+ 15%
CAC 40+ 16%
BEL 20+ 17%
PSI 20+ 17%
EURO STOXX 50+ 17%
Source: Euronext, 2014
2. Investment Opportunities
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EnterNext® already covers over 750 SMEs listed on the regulatedmarket of Euronext and on Alternext.
EnterNext® has been designed to facilitate the financing requirements anddevelopment of European SMEs that operate regionally, nationally and internationally.
2.3 Enternext, the Paris dedicated market to SMEs
Source: Euronext, 2013
Capital raised(in € million)
2. Investment Opportunities
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2013 ( € billions )
Q1 Q2 Q3 Q4 Full Year
United States 48,2 56,5 47 52,5 154,3
Asia Pacific 55,1 5,6 41 57,3 28,3
EUROPE 25,5 5,6 23 44,2 93,5
France in 2nd positionworldwide for International
bonds insurance
France Leads EuropeanCorporate Bonds Markets
In terms % of total outstanding
Source:BIS, 2013
and AFME, 2013
European High yield bond marketFrance represent 20% of the European high yield market
2.3 Paris, the leading European Corporate Bond Markets
2. Investment Opportunities
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Asset Classes Total Return €uro Bonds vs €uro High YieldTotal return
Euro High Yield Among the most attractive market in the world
Source: Dealogic, 2014Source: BofA-ML, Bloomberg
2. Investment Opportunities
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Source: EFAMA/ AFG/ CSSF, 2013
EUROPEANOUTSTANDING:
€8,944bn(end 2012)
* Assets domicilied in Luxembourg andIreland reallocated to promoter’s country of
origin - AFG estimates
French Asset ManagementIndustry Dynamism
Assets under management in France (€ billion)
Funds financialManagement industry*
in Europe
2.4 Large investment pool in Europe
2. Investment Opportunities
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EUROPE:€590 bn invested by EVGA members in more than5000 companies every year on average since 2000€36 bn invested in 2013
aa
2.5 Paris, a Major Private Equity Market in Europe
Private Equity in Europe French Private EquityNearly 1,600 companies received funding from
French Private Equity in 2013,
80% of them are small andmedium-sized enterprises (SMEs)
Source : AFIC, EVCA, 2013 and AFIC, 2014
United Kingdom :€16 bn investedin 2012
Germany :€5.3 bn investedin 2013
FRANCE :€6.5 bn investedin 2013
FRANCE :€100 bn invested byAFIC members in1500 companies everyyear on average forthe last 15 years
FRANCE :4000 private equityprofessionals€150 bn under management(end 2013)
2. Investment Opportunities
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3. Finance INNOVATION ─ Financial Services Cluster
1000 innovative financial SMEs identified
Financing SMEs and innovative projects
Business Incubator dedicated to Financial SMEs
40 Research Chairs
A network of more than 200 researchers
Banking, Insurance, Asset Management,Real Estate, Social and Solidarity Economy(SSE), Data and Consulting Jobs
SMEs &Innovation
FinancialResearch &Innovation
Innovationin Financial
Services
FinanceInnovation
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4. Paris, an Open, Secured and InnovativeInternational Leading Financial Center
Foreign Investors Hold Nearly47% of France-Listed Companies
Foreign Investors Hold 66%of France Government Bonds
Source: AFT, Banque de France, 2012
France is number 2 in Europe in terms of foreign presence,with more than 500 foreign banks and financial institutions
domiciled in the Greater Paris Region.
65,1%
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4. Paris EUROPLACE International Cooperationand Roadshows
NEW YORK
BOSTONMONTREAL
TORONTO
DUBLIN
STOCKHOLMMOSCOW
ALMATY
BEIJING
TOKYOSHANGHAI
HONG KONG
SINGAPORE
BOMBAYDUBAÏ
QATAR
BAHRAINCASABLANCA ALGIERSMADRID
BRUSSELS
ROME
PARIS
Partnerships and Agreements signed (MoU)Paris EUROPLACE International Financial Forums
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www.paris-europlace.netTwitter: https://twitter.com/europlaceLinkedIn: http://www.linkedin.com/company/paris-europlace