- Learn about investing in the Euronext, Europe’s largest stock exchange.
- Ways to invest – shares, ETFs and index funds – where to invest, and how to invest step-by-step.
- Pros and cons of investing in the Euronext.
Euronext is a stock exchange operating regulated share markets in seven countries – Belgium, France, Ireland, Italy, the Netherlands, Norway and Portugal – as well as non-regulated activities in other parts of the world. It’s the largest stock exchange in Europe, with almost €7 trillion in the combined market capitalisation of around 2,000 listed companies. That makes it about 50% bigger than the London Stock Exchange.
Some of the largest companies listed on Euronext include:
- LVMH. Moët Hennessy Louis Vuitton, encompassing not only the brands appearing in the company name, but also Christian Dior, Fendi, Givenchy, Marc Jacobs, Stella McCartney, Loewe, Loro Piana, Kenzo, Celine, Sephora, Princess Yachts, TAG Heuer, Bulgari, and Tiffany & Co).
- L’Oreal. Cosmetics and personal care.
- Volkswagen. Multinational motor vehicle manufacturer.
There are also plenty of SME (small and medium-sized enterprise) listings with growth potential, as well as large companies, such as Procter & Gamble, with dual listings on other world exchanges. In short, it’s a market with lots of choices for Singaporean investors, and Singaporean residents are eligible to trade in securities listed on the Euronext.
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What can you invest in?
Ways to invest in the Euronext
You’ll need to decide which of the following investment paths is right for you, or whether you are going to opt for a combination of them.
Individual company shares
Investing in individual company shares is very risky, especially for beginners. Even seasoned share market experts find it difficult to predict whether – or when – a company's share price will go up or down, and the share price of a single company is likely to see more volatility than a fund investing in a diversified basket of shares (see below).
Day trading and short-term trading are best left to professional investors and market veterans. Other investors, having done extensive research or taken professional advice from a trusted expert, could consider investing in individual companies for the long term. But always remember that there are many factors that can cause share prices to fall, so you should never invest an amount that you cannot afford to lose.
Exchange traded funds
An exchange traded fund, or ETF, pools investors’ money to buy assets such as shares, interest-bearing bonds and units in property trusts. The fund has a manager, and units in the fund can be bought and sold on a stock exchange.
Most funds track the value of an index (see ‘Index funds’ below) or a commodity (such as gold). Because they are trying to mirror the asset they are tracking, they don’t aim to outperform the market, but merely follow its price movements. This makes them a relatively low-risk form of investment, and also low-cost, since the management fees reflect the fact that they are passively rather than actively managed.
An example of an ETF which tracks a European market segment, other than the main Euronext index, is the BNP Paribas Easy ECPI Circular Economy Leaders (PA: REUSE), which invests in companies with strong social and environmental objectives. Other Euronext ETFs may invest, for example, in banks (e.g. Lyxor Stoxx Europe 600 Banks UCITS ETF – PAR: BNK) or agribusiness (BNP Paribas Global Agribusiness THEAM Easy UCITS ETF – PAR: EAG).
Like all major stock exchanges, Euronext has indexes (or indices), hypothetical portfolios of investments representing a sector of the market, such as the 100 largest companies valued by market capitalisation. You can’t buy a share in an index, but you can buy units in ETFs which aim to replicate the content of an index by pooling investors' funds to purchase shares in companies included in the index.
Euronext indexes, and some examples of funds which track them, include:
- Euronext 100 index. Blue chip stock index of the 100 largest companies on Euronext.
- AEX (Amsterdam Exchange Index). 25 of the most recently traded securities on Euronext Amsterdam. iShares AEX UCITS ETF (AMS: IAEX) tracks this index.
- BEL 20. 10-20 (most often 20) companies trading on Euronext Brussels. Tracked by Lyxor BEL 20 TR (DR) UCITS ETF (BRU: BEL).
- CAC 40. 40 most significant companies amongst the 100 largest trading on Euronext Paris. Tracked by Xtrackers CAC 40 UCITS ETF (GER: 4MYR).
- ISEQ 20. 20 companies with the highest trading volume and market capitalisation trading on Euronext Dublin.
- FTSE MIB. 40 most traded stocks on the Italian national stock exchange. Tracked by WisdomTree FTSE MIB 3x Daily Leveraged (MIL: 3ITL).
- PSI 20. 20 companies with the largest market capitalisation and trading volume on Euronext Lisbon.
- OBX 25. 25 most liquid companies on the Oslo stock exchange.
Unsure about what share dealer to use?
Where to invest in the Euronext
Looking for Singapore's best online share broker? Compare options with Finty.
First time investing?
How to invest in the Euronext
Step 1: Choose a broker
There are hundreds of online share trading platforms to choose from. When comparing options, check their brokerage, cash withdrawal and inactivity fee amounts, as well as the tradable securities offered (which should include ETFs and shares).
Whichever broker you choose must have access to the Euronext stock exchanges. For the sake of having all your investment activity in one place, you may also want access to Singaporean and European share markets from the same broker.
Some brokers offer commission-free trades on ETFs. If you’ve decided to invest in shares, look for a broker offering fractional shares, since some Euronext companies have high prices for a single share – upwards of €500.
Step 2: Decide how much to invest
Only ever invest what you can afford to lose because share markets are volatile. If you can’t withstand losses in the short term, it’s best to wait until you can, or plan to invest for the long term only.
Step 3: Transfer funds to your account
Add funds to your trading account with a bank transfer, the most commonly accepted method.
It may take some time for funds to clear before you can start trading. Note that your broker may require a minimum deposit amount.
Step 4: Choose between shares and an ETF (or a combination of them)
ETFs are diversified across a range of companies, so they typically experience lower price volatility than individual company shares and can be better for long-term investment.
Short-term investors hoping for quick capital gains (but also prepared for losses) may prefer to buy shares. ETFs can often be traded commission-free.
Step 5: Configure your order
Depending on the broker you use, you can choose from various kinds of orders.
A market price order is the most straightforward, requiring virtually no setup. Once executed, you’ll get shares at the next available market price for the share or fund unit.
If you have a specific strategy in mind, you’ll need more options in terms of order configuration. Some brokers have highly customisable orders that can be triggered by events, meaning you can buy or sell when your chosen share or fund hits a price target.
Step 6: Place your order
When you’re happy with all of your decisions, submit your order to be executed.
Step 7: Monitor your investment
Share investment should not be a set-and-forget activity. Even if you intend to invest for the long term, you need to keep an eye on the company or fund's performance and price movements.
Still not sure?
Pros and cons
- More investment opportunities. Branch out from investment solely in Singapore to invest in securities involved in Europe’s largest stock exchange.
- Lots of choices. There are over 2,000 Euronext-listed securities, including both shares and ETFs.
- De-risking. Diversify your portfolio by choosing an ETF to reduce volatility.
- Euronext trading hours. Euronext trading hours are 9:00am to 5:30pm Central European time, Monday to Friday. Central European time is six hours behind Singapore, which can be inconvenient when placing price-sensitive orders.
- Foreign currency risk. Having a trading account in SGD, and trading in euro-denominated shares and ETFs exposes you to foreign currency risk and foreign exchange conversion fees.
- Foreign event volatility. Euronext share and ETF prices are subject to volatility caused by events occurring in a wide range of European countries, whose potential effects may not be immediately apparent to Singaporean investors.