Yahoo Finance Amsterdam takes on the City in post-Brexit battle
Amsterdam, home to the world’s first “modern” stock exchange in the 17th century, is stealing the limelight from London once again. With EU-based financial institutions banned from trading European stock in London as a consequence of Brexit, Amsterdam overtook London as Europe’s top trading hub last month.
In a change described by one analyst as "symbolic", shares worth more than €9bn (£6.4bn) a day were traded on Euronext Amsterdam and the Dutch arms of CBOE Europe and Turquoise, a fourfold increase on December. In London, meanwhile, volumes of daily European share trade plummeted to €8.6bn, according to CBOE Europe figures.
Amsterdam is not only tipped for the €30bn listing of Universal Music by Vivendi but traders say it is also becoming a popular destination for listing special purpose acquisition vehicles (Spacs) – “blank cheque” companies that raise money by floating and then merging with private firms to take them public.
Five international companies have recently chosen the Dutch stock exchange, including Polish InPost and Spanish Allfunds, while Dutch-owned firm Just Eat Takeaway recently decided not to scrap its Amsterdam listing and move solely to London, with trading volumes on the continent almost twice as high.
“Whereas in the past Euronext would have been considered as a potential alternative listing destination to London, a listing on the European continent is now being considered as a first choice destination,” says René van Vlerken, head of listing at Euronext Amsterdam.
“In the past few years, many alternative trading platforms have created a trading hub in Amsterdam, anticipating the possible negative effects from Brexit. Since Dec 31, many… have seen trades from London redirected to their venues, as the UK is not recognised as being equivalent by the EU.”
The Dutch capital has meanwhile been wooing international business by trumpeting its assets: “A supportive regulatory environment for the financial market industry, a strong banking and financial sector, strong focus on technology and innovation, plenty of young talent and a friendly social environment and surroundings.”
Van Vlerken adds: “This, combined with the strong international track record of Euronext Amsterdam, makes the Netherlands a great place for these trading platforms.”
Victor Everhardt, head of finance and economic affairs at Amsterdam council, regards the share trading surge as part of the Dutch capital’s appeal. It attracted 101 new international businesses even in coronavirus-plagued 2020.
“It’s not because of tax regulations,” he says. “I think it’s an influx coming from Brexit, looking at the European Union and seeing certain areas as the gateways to the rest of the world. Amsterdam is one of them. We do have a 20pc cap on bonus earnings in the Netherlands, where other European countries have 100pc, but still we see this trend of our stock market expanding.”
Another trend, say Dutch observers, is for foreign businesses to put physical entities in the Netherlands. The Netherlands Foreign Investment Agency has announced that 218 “Brexit” companies have moved over since the 2016 referendum, including 45 financial businesses representing about 1,000 jobs.
“Brexit is posing specific problems for specific types of companies - among them financial firms - and the Netherlands offers a very good ecosystem and safe space for companies in need of continuing their businesses on the European market,” says spokesman Michiel Bakhuizen.
Amsterdam is a good alternative to the United States in his case, says Frank van Roij, managing director of ESG Core Investments. ESG is the first Spac to list on the Euronext Amsterdam this year; it wants to take a private business working on energy transition or clean water public.
“We are focusing on north-western Europe for finding a target company, and focusing on the environmental, social and governance [ESG] theme,” he says. “Here, we can facilitate a listing in the home market. ESG is a really important theme in Europe, with a lot of attention from institutional investors but also retail investors. Those elements made Amsterdam the obvious choice for us.”
The trend is not all one-way, however. Last year Anglo-Dutch giant Unilever settled years of wrangling about its corporate base by opting to consolidate its structure in the UK, rather than the Netherlands.
Economists and traders do not believe Amsterdam is about to push London off centre stage. “There are two things to look at: will Amsterdam grow as a financial centre, and will it grow as a share centre?” says Bert Colijn, senior economist at ING. “I think the latter. Amsterdam has been shown to be pretty well set up to do so in the post-Brexit environment. But London was so strong prior to Brexit, it was clearly the European financial centre, able to compete on a global level, that this is something no other European city can replace.”
This is for the best, says Everhardt. “In certain periods of time, over the centuries, sometimes one is ahead of the other, but we need each other. Prosperity in London throughout the centuries has always meant prosperity for Amsterdam and its region.”
