Today we are continuing our series of articles on the world’s major exchanges. This time, we are going to write about the Amsterdam Stock Exchange, or Euronext Amsterdam as it is known now.
Euronext Amsterdam’s Place in the Global Economy
Euronext Amsterdam is not one of the world’s largest exchanges — it lists only 200 companies with a total market cap of less than $1.5T*. However, it is part of the Euronext group, which as a whole is the world’s fifth (total market cap $4T, around 1500 companies listed) and holds the first place on the continental Europe’s stock market. Besides, Euronext Amsterdam holds immense historical significance as the world’s first stock exchange, opened in 1602. Many disasters of the stock market, such as bubbles and complex speculative schemes, first became known here.
Most Euronext Amsterdam companies are headquartered in Netherlands and neighboring countries. On average, they are not as famous as companies from larger stock exchanges, but there are some big names as well. They include the Royal Dutch Shell oil company (more commonly known as simply Shell), the Unilever food and chemical manufacturing company (famous for its AXE, Dove, Knorr, Lipton, and Rexona brands), and the Heineken brewing company. If speaking about the guest companies listed there, the most famous of them, of course, is Microsoft, an American global technology company and software maker.
The bull sculpture at the entrance to Euronext Amsterdam
Euronext Amsterdam, originally the Amsterdam Stock Exchange, was founded in 1602, making it the world’s oldest stock exchange. The exchanges that existed prior to that in Europe were primarily commodity exchanges, and the stock market was still in its infancy.
The Amsterdam Stock Exchange was primarily created for the needs of a single company — the Dutch East India Company. At its time, it was the world’s largest joint-stock company, with some historians even arguing that it was the world’s first full-fledged joint-stock company. The Amsterdam Stock exchange admitted up to 4500 people — more than any other. One could trade a great number of assets there: commodities, shares, bonds, futures, and options. The exchange played a major part in the country’s rise to economic dominance and put a number of other European countries into debt to the Netherlands.
It is thanks to the Amsterdam Stock Exchange that stocks became a widely recognized asset rather than a mere curiosity. However, stocks continued to be a controversial phenomenon. The first stock traders were quite inventive, and some of the speculative schemes that would seem typical today were rather shocking at the time. In the very first years of the Amsterdam Stock Exchange traders started to use short-selling when the investor borrows the share instead of buying it in order to sell it immediately afterwards, counting on a price decrease. The authorities ruled that this practice was a scam and outlawed it. Then, in 1636-1637, the first financial bubble known to history grew, dubbed the «tulip mania». During that period, speculators managed to create an unhealthy level of activity over tulip futures. In 1636, the prices of tulip bulb shipments multiplied — first for a select few cultivars, then for all the others. However, the prices plummeted again in 1637, and many traders on the market felt cheated. The public’s confidence in stock trading as a whole took a serious hit for quite a while. Still, the Netherlands kept its lead in the global financial market, and the tulip industry continued to grow.
In 2000, the Amsterdam Stock exchange merged with the Paris Bourse (founded in 1724) and the Brussels Stock Exchange (founded in 1801), forming the Euronext group. In 2002, it also absorbed the Lisbon Stock Exchange (found in 1769) and the London International Financial Futures and Options Exchange (LIFFE, founded in 1982). The stock exchanges that joined the group were renamed to Euronext Paris, Euronext Amsterdam, Euronext Brussels, and Euronext Lisbon.
In 2007, Euronext merged with the New York Stock Exchange (NYSE), forming the gigantic NYSE Euronext conglomerate. In 2013, it was in turn purchased by the Intercontinental Exchange Company and reorganized. The LIFFE was once again split from Euronext, and now Euronext is exclusively a stock exchange group that is part of Intercontinental Exchange. However, all of these exchanges remain de facto autonomous, so we shall review them all individually.
What an Investor Should Keep in Mind
Continental European markets are not as popular with online brokers as the Anglo-Saxon ones, and Euronext Amsterdam is not one of the world’s leading exchanges. Still, most major brokers provide access to the whole Euronext group, including Euronext Amsterdam. Obviously, the broker must provide direct market access, or DMA, to the exchange, rather than simply offering contracts for difference, or CFDs. EXANTE is one of the brokers that give DMA to Euronext Amsterdam.
A full list of the companies traded on Euronext Amsterdam can be found on the Stock Screener service by msn.com. To view the list, select Netherlands as the Country/Region, then Amsterdam in the Exchange section. Let's see what companies are leading by various metrics this year. If the parameter you are interested in is not shown in the table, you can add it by clicking on the "+" button in the Filters section.
Microsoft leads in terms of capitalization, far ahead of other companies (MSF; market cap: €530B). If you only consider Dutch companies, then the leader is an oil and gas company Royal Dutch Shell (RDSA; market cap: €177B).
In terms of semi-annual growth the leader is an electronic engineering company DocData (DOCD; market cap: €4.5B; semi-annual stock price growth: 127%). But the company has has profitability issues: at the moment it is unprofitable and its P/E ratio is negative at -3.8. If you only consider companies with regular P/E ratio, then your choice is a metallurgical group AMG Advanced Metallurgical (AMG; market cap: €703M, semi-annual stock price growth: 59%, P/E ratio: 20). And if we turn to annual profit growth, the largest lead has the Lucas Bols liquor factory (BOLS; market cap: €243M, annual profit growth: 5220%, semi-annual stock price growth: 17%, P/E ratio: 20).
There are no super-expensive shares among those listed on Euronext Amsterdam. The most expensive stock is HAL Trust (HAL; market cap: €14B), and it is only €183 share with an average daily trading volume of 7,300 shares. And the most popular stock is ING banking group (INGA; market cap: €59B, P/E ratio: 13; daily trading volume 17.6M; share price: €15).
Online brokers’ commissions while working with Euronext Amsterdam are usually a percentage of the amount being traded and range between 0.05% and 0.13%. The minimum commission for a transaction is usually a few euros. With EXANTE, the commission is 0.05% of the amount being traded, and there is no minimum commission.
The entire Euronext group works from 9:00 to 17:30 Amsterdam time.
* The letters stand for large numbers. T stands for trillions, B stands for billions, and M stands for millions.