The EU has a new weapon in the stock market war

The stock market with the longest history in the world is in full swing. Amsterdam profited from the upheaval caused by Brexit, surpassing London to become the busiest European stock market.

Euronext Amsterdam, which uses its official name, also benefits from rules that allow the use of English prospectuses, gaining broader liquidity through six other exchanges under the same ownership, and opening up to innovations such as special purpose acquisition tools. This year it has reached a new high in funds raised through its initial public offering.Biotechnology company Benevolent artificial intelligence Although headquartered in London, it plans to go public there through the largest planned Spac merger on the African continent.

To be sure, the London Stock Exchange is fighting back.It still holds more IPOs in total, and Shell recently announced plans Scrap half of the Netherlands It dual-listed and moved its tax residence and all shares to London.

For all these plays, the competition between Amsterdam and London has largely missed the point. Practical actions are increasingly transferred to other places. In terms of stock trading, corporate bond issuance, and almost all other important indicators, the whole of Europe has been left aside by the US, China, and Hong Kong markets.

According to Dealogic’s data, the US market held 954 IPOs in 2021, while all exchanges in the European Union and the United Kingdom totaled 389. According to New Financial data, since 2006, the share of domestically listed Asia-Pacific and US companies in the total global market value has increased significantly, while European companies (including companies in the UK and Switzerland) have fallen from 30% of the total market value. To 17%, a think tank.

“The long-term trend is very scary,” said William Wright, its managing director. “The economic hinterland of the U.S. market and the Asian market is more active.”

There is no shortage of innovative start-ups in Europe. But historically, global investors have underestimated their income potential relative to competitors elsewhere, because economic growth on the African continent has been slower and national borders have made it more difficult for companies to scale.

Now, the EU has a chance to change the narrative that it cannot miss. In the first nine months of this year, European startups attracted 19% of global venture capital funding, up from 13% in 2020. In contrast, Europe is somewhat more attractive. China is cracking down on foreign investment and technology groups, and the valuations of many US private groups are jaw-dropping.

But this also reflects the increasing success of the European Union and the United Kingdom in areas such as financial technology and biotechnology. The vast majority of this year’s venture capital funding is late-stage financing, which has more than tripled this year, reaching US$60 billion. This means that many recipients will soon seek a listing.

Historically, many of the strongest groups have been attracted to American exchanges by deep investor groups and more active exchanges, especially retail investors. Dealogic said that in the past five years, 60 European Union and British companies listed in the United States, while only 16 companies did the opposite.

British policymakers are scrambling to make Britain more attractive.The Financial Conduct Authority changed its Spac rules in August and completed a Overhaul A listing system designed to attract startup companies. Founders who choose to be listed on the market premium will be allowed to hold shares with higher voting rights and only provide 10% of the shares to the public, which is less than 25%.

The size of the EU gives it a natural advantage. Brussels has been talking about the real cross-border financial services market for years, but it has not provided it. Such a capital market alliance will make it easier for companies to raise funds domestically.It recently proposed to create a real-time database called Integrated tape, More than 400 trading venues patched together. The enthusiasm of the incoming German government gave this. But it needs to act quickly, not just against the rules of the stock market.

“Europe needs to accelerate the expansion of multinational companies. Since the coordination of administration, taxation, rules and regulations in 27 countries/regions takes time, you may need a common overlay or sandbox, and fast-growing companies can agree to meet European standards , And then immediately enter all EU countries,” Jan Mischke said of McKinsey Global Institute.

If Brussels loses the ball, Amsterdam’s victory over London will be an empty victory.

brooke.masters@ft.com

Follow Master Brook My FT And in Twitter



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