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The US stock market continues to outperform Europe in new listings. and it ain’t no fluke

WorldEuropeThe US stock market continues to outperform Europe in new listings. and it ain't no fluke
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People applaud as the closing bell rings at the New York Stock Exchange.

Michael M. Santiago | Getty Images News | Getty Images

Analysts told CNBC that the United States is more attractive to new listings than European exchanges and there’s not much the Europeans can do to change that.

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British Chip Designer Branchowned by japan softbank, announced earlier this month that it intends to list in the US this year. This is despite an intense lobbying effort by the British authorities to see the company market its debut in the UK.

building materials giant crhWhich is headquartered in Ireland, also said it would move its primary listing to the US, citing “commercial, operational and acquisition growth”. Occasion,

Both examples highlight how the US stock market is more attractive to the corporate world.

Roger Jones, head of equities at London and Capital, told CNBC that there are two main reasons for this.

“Sellers or listers can get better prices in the US which still trades at significantly higher valuations than Europe. Secondly, there are also a lot of preferred sectors, and industries which are more immature companies looking to get into the market , large U.S. sectors such as technology, bio/med tech and communications companies,” he said.

northvolt, The company, a battery maker based out of Sweden, is still in the start-up stage but has plans to list in the future. CEO Peter Carlsson told CNBC in February that he was considering a dual listing, one in Sweden and one in the US.

“In the long run, I definitely see it as an opportunity,” he said.

In 2022, states will have 130 deals in new initial public offerings, raising nearly $9 billion, according to Data from EY. About 70% of these IPOs were on US exchanges.

On top of the high valuation, Caroline Simmons, UK chief investment officer at UBS, highlighted that the US offers scale in a way that European exchanges do not.

He called this the “clustering” effect—highlighting how much easier it is to get investment when you’re in the same location as other companies in the same sector. Hence why tech companies like Arm look to the US for new listings, given how many other tech companies are listed there as well.

Simmons also said there is “no structural reason” why Europe cannot attract a similar level of listings. “But it largely comes back to logic,” she said, and so there’s not much the continent can do about it.

SoftBank looks to raise $8 billion in 2023 with IPO of US chipmaker Arm

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