People clap through the closing bell of the New York Stock Exchange.
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The US is more attractive than European stock exchanges for new listings, and there is little Europeans can do to alter that, analysts told CNBC.
British Arm chip designer owned by Japan’s soft bank, announced earlier this month that it intends to go public in the USA later this 12 months. This comes despite intense lobbying by British officials for the corporate to go public in the UK
Constructing material giant CRHbased in Ireland, also said it might move its predominant listing to the US, citing “increased industrial, operational and acquisition-related possibilities“.
Each examples show how the US stock market is more attractive to the company world.
Roger Jones, head of equity at London and Capital, told CNBC that there are two predominant the explanation why this is happening.
“Sellers or auctioneers can recover prices in the US, which still trades at much higher valuations than in Europe. Secondly, many of the popular sectors, in addition to industries that were more immature firms trying to enter the market, were large US sectors, e.g. tech, bio/medical and communications firms,” he said.
Northvolt, a Swedish-based battery maker, is still in the start-up phase but has plans to go public in the longer term. CEO Peter Carlsson told CNBC in February that he was considering listing on two exchanges, one in Sweden and one in the US
“I’d definitely see it as a possibility in the long term,” he said.
In 2022, 130 new public offerings were made in the USA, bringing in roughly $9 billion. data from EY. Nearly 70% of these IPOs took place on US stock exchanges.
Along with higher valuations, Caroline Simmons, director of investment at UBS in the UK, highlighted that the US offers a scale that European exchanges don’t offer.
She called it the “clustering” effect – highlighting how easier it is to get investment when in the identical space as other firms in the identical sector. That is why tech firms like Arm are on the lookout for new listings in the US given what number of other tech firms are listed there as well.
Simmons also said there was “no structural reason” why Europe couldn’t attract the identical level of rankings. “Nevertheless it’s back to mass dispute,” she added, and subsequently there is little the continent can do about it.