European companies that have added American registration often do not see an uprising to their evaluations, noted the Financial Times, in a challenge to the affirmations of certain leaders according to which a stock market presence of New York is an infallible path towards higher equity prices.
An analysis of 12 listed companies in Europe that have added American lists since 2016 – including Ferguson, CRH and Floating entertainment – found that, in half of the cases, the evaluations fell, while in a certain number of cases, there was no increase in the number of analysts according to the stock. However, two thirds of the companies have experienced greater liquidity in their actions after the move.
“The basic thesis you move to the United States and that the course of your action is improving is not correct,” said Richard Werner, associated with BCLP law firm. “It is certainly not as simple as that.”
European companies and their investors have been attracted to the The enormous increase in the US stock market In recent years, believing that – despite a recent market sale – they have benefited from multiple higher gains.
British broker TP ICAP last week said he was planning to List its data activities in New YorkWhile in February, London, London, Glencore, said that he was examining if other sites – including the United States – would be “better suited” to the negotiation of its actions, with a potentially major blow to the historic London status as a mining financing center.
London Ashtead Construction Group plans to move His main list in New York and his Chief Executive Officer said: “The advantages of an American primary list on other markets. . . have become more obvious in recent years ”. The British advertising group WPP has “Look at” a switch, while the French asset manager Tikehau also envisages such a step.
The conclusions of the FT intervene while European decision -makers are trying to revive the domestic markets and encourage companies to stay at home. In the United Kingdom, regulators have Revision rules For listed companies in order to make London more competitive.
The companies analyzed by the FT have all added new American quotes – a primary or additional list – while retaining their European lists.
The supplier of plumbing equipment based in the United Kingdom Ferguson and Gambling Group Flutter Entertainment are among the groups to have added American announcements in recent years, as well as small businesses such as the Dry Bulk Operator Himalaya Shipping and Pharmaceutical Company Indivior.
The group of Irish building materials found CRHThe Indivior group and the Okeanis Eco Tankers shipping group was the only companies to have benefited from an increase in the three measures analyzed – evaluation, action trading volumes and following analysts – while the Burford Capital litigation specialist and the Spanish Ferrovial infrastructure group has experienced no advantage. The others failed on at least one measure.
The evaluations of half of the companies analyzed were lower in New York than they were on the local markets before the move, with smaller actions stronger. On average, the price / benefit ratio of 12 months in the long term for small businesses – those of less than $ 10 billion in market capitalization – was around 7% in New York, while for large companies, it was down approximately 1%.
“For smaller or medium-sized European companies, a secondary list in the United States may not arouse interest among American investors who look at large companies where brand recognition is more global,” said Apostolos Thomadakis, research manager at the European Capital Markets Institute reflection group.
However, the CRH experienced a supported boost from its New York list. Its medium P / E ratio has gone from 12 times within 18 months before changing its primary list in the United States at an average of 15 times within 18 months that followed.
But Flutter, which added an American quote in January 2024 and then made in New York its main list, had no improvement – its P / E ratio has increased from 29.8 times to the United Kingdom to 29.1 times.
The same goes for the former FTSE 100 Ferguson and Ferrovial constituent, whose average evaluations in the United States were 9% and 11% less after the American movements.
The addition of an American announcement can be an expensive step – Werner from BCLP has said that the cost may vary from approximately £ 500,000 to more than 1 million pounds sterling, according to the legal, accounting and banking scale of investment services used, plus the costs invoiced by scholarships. Companies also have additional and in progress costs to maintain the list which can reach tens of thousands of dollars per year.
“There are a lot of direct costs and indirect costs,” said Kim Balle, financial director of Torm, who added a registration on the Nasdaq stock market in 2017.
The analysis of the FT has not taken into account factors such as the versions of the company’s profits, regulatory changes or changes in the assessments of the sector, which could all affect the P / E ratio of a company.
Most companies have benefited from greater liquidity – the ease with which the shares can be negotiated without necessarily moving the price. Large companies have experienced a boost of about four times on average when compared to their listed actions in Europe with their United States, while small businesses have increased by almost 45%.
CRH liquidity is now about seven times higher in New York. But the liquidity of Ferrovial has won it: around 37,000 of its shares per day are negotiated in the United States, against more than 1 minute in Europe both in the 10 months before and after the American move.
It was “as planned with the new Nasdaq list,” Ferrovial at the FT, adding that “the group’s intention is to develop additional liquidity in the United States over time”.
The FT also found that in average, there was little or no increase in the coverage of analysts for a certain number of companies analyzed, even if the bosses often cite greater visibility as a reason for a New York presence.
Oliver Lazenby, associated with the Freshfields law firm, said: “All these things are over, banking analysts and institutional investors do not necessarily have resources [to cover every single company]. “”
The size of the American markets means that investors and analysts tend to take more to notice large companies such as Flutter or CRH, he added.
“In a larger sea, attention tends to go to the biggest fish,” said Paul Amiss, associated with Winston and Strawn. “If you are a tenth of this size, then you will clearly have to work harder to make waves.”
Methodology
The New York Stock Exchange and the NASDAQ provided the FT lists of companies listed in Europe which had added American lists since 2016. Large companies have been defined as those with a market capitalization of more than $ 10 billion. The analysis of the FT has taken the rotation ratio of a company’s shares – measured as the volume of negotiation volume of four weeks of a shares in the average number of its actions in circulation expressed as a percentage – as a measure of liquidity. The spaces and the ADRs were omitted.
To maintain equal time scales between an American quote and a European quote, the FT used the number of weeks of the American registration date to the present day, and applied the same number of weeks to the period preceding the American move. In cases where there were more American commercial data, we used the complete series in both. Although all efforts were made to create an exhaustive set of data, there was no simple way to bring together a full list of companies and some can be missing accordingly. We initially found 15 companies that had added an American list since 2016, but three – Flex LNG, Nyxoah and Alvotech – had no continuous figures for their multiple price price at 12 months due to negative profits forecasts, which was omitted from the analysis. Four data points in TORM, where the P / E ratio briefly exceeded 50, were also excluded for visual purposes. The relatively small size of the sample in this case is inevitable, which can distort the results. Data on February 28.
