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The dream of a real Nasdaq with European sauce

Euronext is launching a stock market segment and an index for European technology leaders (Tech Leaders), a kind of European Nasdaq. But the timing is questionable.

The pan-European stock exchange Euronext announced Tuesday in Paris the launch of a new market segment dedicated to technology companies. This segment called “Euronext Tech Leaders” includes more than 100 high-growth companies. Techs, fintechs, biotechs, medtechs, cleantechs… Nothing but technology stocks listed on the various Euronext markets: Paris, Amsterdam, Brussels, Dublin, Lisbon, Milan and Oslo.

The initiative is not lacking in interest, especially since this segment will have its stock market index available from July. The comparison with the American Nasdaq market and its Nasdaq 100 index is obviously obvious. But if it is necessary to compare what is comparable: the “Euronext Tech Leaders” index, with its hundred companies, should weigh more than 1,000 billion euros in market capitalization. Within the Nasdaq 100, Apple alone represents 2.3 trillion dollars…

Bring forth the next European unicorns and make the transition to the stock market. The initiative is not lacking in interest.

“The only relevant level to represent a technology stock market comparable to that of the United States is the European level”, underlines the boss of Euronext, Stéphane Boujnah. According to him, investors are not satisfied with the local level. With Euronext Tech Leaders, anyone interested in electronic payment services can find both the action Worldline listed in Paris and Adyen stock listed in Amsterdam.

Integration into this new segment assumes a capitalization of at least 300 million euros as well as a minimum growth rate for companies weighing less than one billion euros. Eight Belgian companies are part of the adventure: Barco, EVS, Melexis, argenx, Galapagos, Hyloris, Mithra and Nyxoah. This is obviously a “plus” for these companies in terms of visibility.

The icing on the cake, the new segment will offer services to high-growth companies that are not yet listed in order to bring forth the next unicorns and make the transition to the stock market.

Will this work? Despite the participation of several major international players such as Goldman Sachs, HSBC and JPMorgan, we can regret the strong French accent of the initiative. The birth of Tech Leaders is also a continuation of Franco-European initiatives, such as “Scale-Up Europe”, an event organized a year ago by Emmanuel Macron to support French and European digital technology.

And then there is the timing of the initiative. Growth stocks are having a hard time. In the United States, the Nasdaq has fallen by more than 25% since the start of the year. European technology stocks are not left out. For example, Just Eat Takeaway and ASML, included in the Tech Leaders, have lost 55% and nearly 30% respectively since January, while Mithra has lost 65%. This gives the impression that the Euronext initiative comes as a cycle may be ending for tech..

Incidentally, this recalls the misadventures of some European technology markets. Little flashback. It was in March 2001. L’Écho announced that the American market Nasdaq was going to take a majority stake in the pan-European market for growth stocks Easdaq. The company would be renamed Nasdaq Europe and based in Brussels. The ambition was to cover the world market, 24 hours a day, thanks to the American Nasdaq, Nasdaq Japan and Nasdaq Europe. It was also the time of the new markets in Europe: Neuer Markt or Euro-NM. But the Internet bubble had just burst. And two years later, in 2003, the Nasdaq Europe announced, in an inglorious way, the closing of its doors.

Stéphane Boujnah sweeps away this question of timing. According to him, this is a response to a structural problem in Europe for growth companies. The question of technological sovereignty arises more than ever on our continent (5G, semiconductors, etc.). “The adjustment of valuations underway on the stock markets has nothing to do with these issues,” he says. The boss of Euronext is totally right on these points. But we must also hope that the tech correction will not last too long on the markets for success to be there…

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