Euronext Dublin, the stock exchange in Dublin, is set to face challenges as one of its largest companies, CRH, delists and moves its listing to New York. CRH, an Irish-based building supply company, has decided to pursue potentially higher profits by portraying itself as an American company. The company recently released its results for the first half of the year, showing a 14% increase in earnings and an 8% rise in sales. CRH currently accounts for nearly half of all trading turnover on the Euronext Dublin exchange and has a market value of €37.5bn. Its departure will leave a significant gap on the exchange.
CRH is not the only company to leave Euronext Dublin. Diageo, the owner of Guinness, and Engage XR, a virtual reality software company, have also delisted. Flutter Entertainment, which owns Paddy Power, Betfair, and FanDuel, may also potentially leave the exchange as it seeks a US listing to expand further across the Atlantic. The decision to delist from Euronext Dublin while remaining headquartered in Dublin allows companies like CRH to better compete for contracts under the Biden administration’s Inflation Reduction Act, which will invest trillions in infrastructure over the coming years.
While Euronext Dublin is experiencing challenges with companies delisting, other exchanges around the world, particularly in the UK and other EU countries, are also facing similar issues. Euronext Dublin, which operates in several European countries, including Ireland, is dwarfed by other exchanges in the group, such as Paris and Amsterdam, which offer access to some of the world’s largest companies. Additionally, the concentration of trading around a handful of companies on the Euronext Dublin platform poses a challenge. Apart from CRH, Flutter Entertainment is also one of the highest traded shares on the exchange, and its departure could have implications.
The decline in trading volumes on Euronext Dublin is primarily due to a shift towards larger average trade sizes. While the market saw €42.5bn worth of turnover between January and July this year, compared to €38bn during the same period last year, the number of trades has been declining since March 2020. To offset this reduction, Euronext Dublin needs to focus on generating initial public offerings (IPOs), which have been relatively low in recent years. The Dublin market has not had an IPO since December 2021.
In conclusion, the delisting of CRH and other companies from Euronext Dublin presents challenges for the exchange. The departure of these companies, particularly CRH, which accounts for a significant portion of trading turnover, leaves a gap that is unlikely to be filled soon. The concentration of trading around a few companies and the decline in trading volumes highlight the need for Euronext Dublin to focus on generating IPOs and nurturing the domestic equity markets.