At a time when Shell is moving its headquarters out of the Netherlands, Amsterdam might fear losing some of the momentum that’s made it continental Europe’s pre-eminent stock-trading centre.
It needn’t worry.
This year alone, the city has seen a record number of initial public offerings while establishing itself as the SPAC capital of Europe, hosting about 40% of the region’s 32 listings. Meanwhile, Amsterdam’s AEX Index has surged 27%, more than twice the gains for U.K.’s FTSE 100, and outpacing any other major indexes in the continent.
At the heart of the rally has been chip-equipment giant ASML Holding NV, up 84%, the best performance among European blue chips. In fact, ASML has grown so large, the market capitalization of the Veldhoven-based company now eclipses that of U.S.’s Intel Corp., the world’s biggest maker of PC processors.
Other names underscore Amsterdam’s resurgence. Adyen NV, a payments processor that handles transactions for companies such as Uber Technologies Inc. and McDonald’s Corp., has risen more than tenfold since its 2018 public offering and is now worth about $84 billion.
The flourishing of Amsterdam’s 419-year-old stock exchange, the world’s oldest, is emblematic of broader shifts sweeping European markets, such as the digital transition — which the Covid-19 pandemic accelerated — and the post-Brexit fragmentation of the industry.
Amsterdam is “insulated from Brexit, totally anchored to the European Union,” and offers access to a massive liquidity pool from across the continent, said Stephane Boujnah, the chief executive officer of Euronext NV, the exchange that operates the AEX. “The post-Brexit dimension is making the attractiveness of EU-based locations more compelling.”
Shell said on Nov. 15 that as part of a plan to simplify the oil giant’s structure, it will relocate its tax residence to the U.K. and move top executives from The Hague to London. The announcement came a year after Unilever Plc, the Anglo-Dutch owner of household products such as Omo and Lifebuoy soap, also opted to become a solely British company.
For many markets, the departure of two such heavyweights would have come as a blow, at least symbolically. But as tech-focused companies have become increasingly prevalent on the Amsterdam exchange, the picture has changed. Today, the Dutch bourse is dominated by makers of semiconductor equipment such as ASML, ASM International NV and BE Semiconductor Industries NV.
It’s also been a vibrant market for new listings. Amsterdam has hosted a total of 20 IPOs in 2021, with companies raising 10.4 billion euros, its highest ever haul, according to data compiled by Bloomberg. A third has come from SPAC listings, highlighting the Dutch city’s triumph over London, which has failed to gain a foothold in the blank-cheque market this year despite overhauling its rules to attract such deals. The City finally got its first major blank-check offering this week, with venture capital firm Hambro Perks Ltd listing a SPAC.
“Amsterdam is a good example of a really good fintech hub where you see new and exciting companies,” said Jason Paltrowitz, a director at OTC Markets, a U.S.-based trading platform that acts as a gateway to U.S. public markets for international issuers.
Amsterdam’s dethronement of London this year from the top spot of share-trading hubs on the Eastern shore of the Atlantic is seen by some as one of the industry’s great upsets of 2021. For others however, it merely marks a return of trading in European stocks to its rightful place, after the U.K’s departure from the continent’s single market.
“It’s not so much that Amsterdam took over, it’s just that equity trading returned to the continent” says Guus Warringa, a director at the Capital Amsterdam Foundation, which promotes the Dutch capital’s financial markets. “Trading in continental stocks was taken away by London, and now, as they say, ‘it’s coming home.’”
Before this year, more than a third of all trading in European equities took place in the U.K. Now, virtually all of this has migrated to continental Europe, according to Panagiotis Asimakopoulos, the head of research at New Financial, a London-based capital-markets think tank. Amsterdam has been the big winner, boosted by its high quality of life, a similar liberal and market-orientated outlook to the U.K., the widespread use of English and a friendly regulatory framework, according to Asimakopoulos.
“Stock trading isn’t a sector that we have heavily focused on in attracting foreign direct investment, but we do welcome, guide, and facilitate these companies when they approach us,” said Amsterdam’s Deputy Mayor Victor Everhardt.
To be sure, the Dutch city is no Wall Street, standing out instead for its mass of commuter cyclists, picturesque canals and infamous cannabis-selling coffee shops, not to mention a strict cap on bonuses. Which partly explains why other parts of the financial industry, such as investment banking, have moved to centers like Paris, Frankfurt, Dublin and Luxembourg in the post-Brexit era.
But the pandemic has had a strong impact on the industry. In the days before the Covid-19, “there was something magical, unique and special in having lawyers, traders, bankers — sort of ecosystems — in one place, where people exchange a lot of information and then meet at the pub after trading hours,” said Euronext’s Boujnah. “This concept of a single city being the single financial center in Europe is over.”
Instead, Amsterdam is becoming a main gateway to Europe’s massive liquidity pool, second only to the U.S. Shell might not be missed for long.