While in Ireland last week, I picked up on business news here that trading in top Irish blue-chip stocks on the Euronext Dublin exchange has soared in the last year as institutional investors have shifted their activity away from London ahead of Brexit. Euronext’s market share in trading Ryanair, CRH and Smurfit Kappa — three highly liquid companies listed in both London and Dublin — has topped 50 per cent each, outperforming London Stock Exchange (LSE) by a wide margin.
The performance contrasts with 2018 and early 2019 when the LSE had bigger market shares in the stocks and was the preferred venue for trading dual-listed companies. But market sources say that uncertainty as Brexit approaches is beginning to isolate the London market and driving the business towards Dublin, which is increasingly seen as a more dynamic market with access to global pools of capital through the Euronext network.
It’s a big change from just a few years ago when many Irish companies — such as Greencore, DCC and C&C — abandoned Dublin for single listings in London.
But post-Brexit, Dublin stockbrokers are looking to the opportunity afforded by being the only English-speaking exchange for companies seeking a European listing.
According to data through July, trading volumes on Euronext Dublin overall have reached record highs in 2020 following the introduction of Euronext’s Optiq technology platform, which gives its more than a 100 members access to high-speed trading and valuable market data.
With a network of exchanges in Dublin, London, Paris, Amsterdam, Brussels, Lisbon and Oslo, Euronext has become the third force in European stock markets with an extensive order book, behind the LSE and the Deutsche Boerse in Frankfurt.
New Euronext is looking to cement that position by buying the Borsa Italiana in Milan from the LSE, which is selling its Italian exchange as part of regulatory disposal to clear the way for its 23 billion euros purchase of data provider Refinitiv.
The LSE said last week it had entered into exclusive talks to sell Borsa Italiana to Euronext after reviewing competing bids from Deutsche Boerse and Swiss Exchange Six. Euronext’s bid involves Italy’s Cassa Depositi e Prestiti and Intesa Sanpaolo who will become shareholders in the French exchange operator if the bid succeeds by subscribing to a proposed capital increase.
Italian regulators have a veto over sale of the Borsa Italiana – Italy’s only stock exchange.
The acquisition of Borsa Italiana would represent a major step towards Euronext’s goal of building a leading pan-European market infrastructure that can serve as the backbone of the EU’s capital markets union and rival the major money centres in Frankfurt and London.
That could be good news for Euronext Dublin and Ireland’s status as a post-Brexit European financial centre.
Furthermore, looking at investments — the Investment Limited Partnerships (Amendment) Bill 2020 will help enable funds operating in Ireland to put money into “big projects that require the capital to be invested at different stages”, according to Pat Lardner, CEO of Irish Funds.
Partnership structures are commonly used to provide financing for major long-term capital projects where the funding is drawn down over a long period.
Currently, none of this investment is taking place via Irish fund structures, according to Irish Funds, due to what it says is a lack of suitable investment fund structures in this investment space.
Over 16,000 people are directly employed in the funds sector in Ireland.
So far this year 57 investment companies have entered or expanded their presence in the Irish market, as the sector here benefits from the UK’s approaching exit from the European Union. (The writer is our foreign correspondent based in the UK).
ANDY JALIL
andyjalil@aol.com
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