Merz calls for pan-European stock exchange
Friedrich Merz has called for the creation of a pan-European stock exchange in a move that would help it compete with Asian and US counterparts and eclipse the liquidity offered on London’s ailing bourse.
In an address to parliament in Berlin, the German Chancellor said European businesses need a “sufficiently broad and deep European capital market so they can finance themselves better and faster.
“It is crucial for the future of our country and our countries in Europe that we fulfil these tasks with renewed vigour,” Merz told German lawmakers. “It is about our prosperity and whether Europe will remain a player in the global economy in a few years or become a plaything of major economic centres in Asia and America.”
The remarks from the leader of the Christian Democratic Union reflect growing concerns around the European Union’s competitiveness, and echo findings from a pair of landmark reports from former European Central Bank chief Mario Draghi and ex-Italian Prime Minister Enrico Letta, which proposed a radical overhaul of the continent’s capital markets.
The papers – both published in the last 18 months – called for a radical shake-up of the EU’s single market to encompass equity and commodity exchanges, and for the 27-state bloc to unify its bond markets.
Much like in the UK, a lack of liquidity and stubbornly low valuations has left European bourses struggling to attract and retain some the continent’s fastest growing firms. Swedish buy-now-pay-later firm Klarna listed in New York last month in a blow to both EU lawmakers and the London Stock Exchange. And in his address on Thursday, Merz bemoaned the fact firms like Mainz’s BioNTech SE have chosen to trade their shares in the US over Germany.
EU stock exchange would pose threat to London
Any pan-EU stock market would immediately pose a threat to London’s status as the eminent bourse in Europe. The UK capital has faced similarly well-documented challenges to encourage top firms to float in Britain amid an embedded pattern of outflows and falling liquidity relative to its American counterparts.
City officials have been buoyed by a trio of recent listings, which have helped quell what had been a dire year for London’s IPO market. Prior to IPOs being confirmed for Princes, the Beauty Tech Group and Shawbrook, London had fallen below stock exchanges in Oman and Mexico in the capital raising stakes.
Commenting on Draghi and Metta’s paper, Merz added: “Draghi was very clear – and Letta argues along the same lines on many points,” Merz said Thursday.
“Europe will only become more productive if it undergoes fundamental change: an end to the regulatory frenzy, faster procedures, open markets, more innovation, more action instead of hesitation.”