Entente put to the 10Y test

The Economist having gently ribbed the refreshed UK-France entente occasioned by the Bayeux Tapestry's London outing, it seemed only polite to ask whether UK corporates have made better investment propositions than French ones over ten years (Brexit, by mutual consent, left aside).

The answer is yes.

The exercise is skewed by construction: no pairing is perfect and every one of them is arguable. We have confined ourselves to 13 comparisons we consider not unreasonable. Performance is measured in €.

On paper the UK takes 7 of the 13, which settles nothing.

That verdict looks rather different once one notices that France wins by a whisker and the UK by a mile. Since a win is scored on 10y price performance alone, the exercise quietly ignores the formidable pay-outs of the likes of Compass, IHG and Tesco. The UK's lead is therefore wider than stated — by how much we are, regrettably, not equipped to say. British corporates remain the shareholder's best friend, by a comfortable distance.

Every British name in the ‘UK wins’ box is an impressive issuer — Diageo included, current penance notwithstanding.

Among the French wins, three rather unexpected successes deserve a mention: 

- Publicis, and not merely because WPP opted for self-immolation

- TotalEnergies, now breathing down Shell's neck; Continental Big Oil was until recently considered a backwater

- Euronext, which found growth in equities while LSEG pursued an expensive ambition in data.



The paradox — handsome shareholder returns from FTSE names alongside authorities forever fretting about a lagging market — is presumably a currency matter. Plenty of euro investors would be delighted to hoover up UK value and lift multiples to another level. Retiring the beloved Pound would, naturally, be an entente breaker too far.