The Euronext is a European stock exchange that combines six national markets in Europe with a presence in Amsterdam, Brussels, Dublin, Lisbon, Oslo and Paris. Like other stock exchanges, the Euronext offers cash and derivative markets, listing market data, custody and settlement services, and other market solutions. The stock exchange also houses over 600 national indices, including the AEX, BEL 20, CAC 40, OBX, PSI 20, and ISEQ 20, and also created the Euronext CAC 40 ESG Index.
As of December 2020, Euronext is one of the largest stock exchanges in continental Europe with 1,493 issues representing €4.5 trillion market capitalization. The stock exchange also has about 255 trading members and over 5,000 global investors.
History of the Euronext
The Euronext was founded on September 22, 2000, as an amalgamation between the Amsterdam Stock Exchange, Brussels Stock Exchange, and Paris Bourse. After the formation of the European Union, the stock exchanges opted to combine to take advantage of the newly integrated financial markets of the common area. The stock exchange went public for the first time in 2001 through an initial public offering (IPO).
In 2001 and 2002, the Euronext acquired the London International Financial Futures and Options Exchange (LIFFE) and the Portuguese stock exchange, known as the Bolsa de Valores de Lisboa e Porto (BVLP), making it one of the world’s largest stock exchanges. These dynamics made the stock exchange attractive to global stock exchanges that were interested in expanding or building up their presence in the European markets.
In 2006, the NASDAQ moved to acquire the London Stock Exchange (LSE), which prompted the NYSE Group to pursue the Euronext. The Deutsche Borse—Germany’s stock market—tried unsuccessfully to outbid the NYSE Group, but the merger eventually took place in April 2007. The Deutsche Borse tried to merge with the NYSE Euronext on two more occasions, but the exchange was acquired by the Intercontinental Exchange in November 2013.
The Intercontinental Exchange decided to pursue an initial public offering of the NYSE Euronext and the separation was completed in June 2014. The Euronext eventually traded independently on the New York Stock Exchange under the new ticker symbol ENX.
Why Invest in the Euronext
The Euronext is one the largest stock exchange in not only Europe but in the world, which makes it an attractive destination for investors. These same dynamics had led to merger and acquisition interest in the company on the part of several other stock exchanges in the past, since stock exchanges tend to realize significant economies of scale and organically entering new markets is difficult from a regulatory standpoint.
Euronext has a market capitalization of about €6.3 billion, as of December 2020, generated €884 million in revenue, has 70.4% cash equity market share, a reported 58.8% EBITDA margin, and has offices in over 20 countries. Euronext earned an S&P rating of A-, showing a stable outlook. For those interested in more information on investing in Euronext, visit the Investors page.
In addition to investing in the stock exchange, investors may want to consider investing in many of the indexes that are maintained by the exchange. These indexes provide unique exposure to several national equity markets, including those in Amsterdam, France, Portugal, and London. Investors looking for exposure to these markets may want to consider exchange-traded funds (ETFs) backed by these major indexes—or many of its other indexes.
International investors should also be cognizant of the risks associated with investing in the Euronext and its indices. In particular, the stock exchange is reliant on the health of the Eurozone and European Union economies. A downturn in these economies could negatively impact trading activity and revenue for Euronext, as well as the valuation of companies listed on the exchange and the indices composed of these equities.