The Big Question: Will a Trump win make equity markets great again?

2024 has been a year full of important elections with far-reaching implications for the European markets.

Results in the UK saw Rishi Sunak ousted as prime minister, while France’s chaotic snap election led to the formation of a new government. Yet to come is the finale of the US presidential race.

Further complicating the financial landscape are the threat of major European businesses defecting to foreign markets.

One example is oil and gas giant TotalEnergies. In April, the company’s CEO expressed an interest in changing its listing from Paris to New York. Bruno Le Maire, then-finance minister of France, said the government would “fight” to prevent the relocation.

Amidst these uncertainties, businesses and markets look to capitalise on opportunities while minimising risks. Such is the case for pan-European stock exchange Euronext, which is using economic predictions to find growth opportunities. 

In this episode of The Big Question, Angela Barnes is joined by Stéphane Boujnah, CEO of Euronext, to discuss the complicated future of European markets.

How will the markets respond to recent elections?

It’s no secret that elections can have a massive impact on the economy. After France’s snap election this summer, stocks were volatile as investors assessed risks from the political gridlock. 

However, Boujnah said he thinks the French markets are now moving beyond the political turmoil, and that “the worst is over.”

In his view, this initial confusion was caused by the rarity of snap elections and hung parliaments in France. Now that the initial confusion is over, the economy has begun returning to normal.

“The whole system is navigating through these new political realities,” Boujnah added. “And the markets have understood that in reality, there were no fundamental changes in the performance of companies in the overall environment. Things are settling down.”

Across the pond in the US, the presidential election is slated for 5 November. A win for Kamala Harris would likely maintain the status quo, but Boujnah is unsure of what effect a Trump victory could have.

This is because the former president’s proposed agenda differs greatly from the current administration’s when it comes to interactions with the EU, NATO, and Ukraine. It’s also been nearly four years since Trump last held political office.

“Nobody knows what Trump two will be compared to Trump one,” Boujnah said.

Should Europe be concerned about businesses leaving?

As for companies potentially leaving continental Europe, Boujnah isn’t too worried. Although there is competition with the US in certain industries, he said EU markets have “more liquidity than ever.”

Boujnah similarly isn’t concerned about the specific case of TotalEnergies and France. In his opinion, it makes sense that the company would look to leave the EU, as several banks and funds banned oil and gas businesses from their portfolios.

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“Their peers in the US continue to attract a lot of investors who are not very much oil and gas scared because the carbon footprint issue is not dominating the collective preference of investors in the US as it does in Europe,” Boujnah added.

According to Boujnah, where Europe should be worried is the UK – specifically London. The size of London’s equity market is significantly smaller after Brexit.

For comparison, the Euronext equity market is more than twice the size of London’s. This, Bounjah said, is why there’s concern around businesses leaving the UK for the US.

“So many companies in London are facing a situation where there is less liquidity in the London equity market than there used to be, and are considering moving to the US to address this liquidity problem,” Boujnah explained. 

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How will younger generations interact with the markets?

An especially important part of determining the future health of markets is gauging how younger generations interact with finances.

Here, Boujnah is especially optimistic due to high rates of cryptocurrency investments among the youth.

“I would take the fact that the young generation is massively investing in crypto as a first step of them being ready for more equity investment,” he said.

Boujnah also believes that due to the current economic reality, people young and old should build safety nets through investment. There’s “slow progress” in this area, with upwards movements in retail investments.

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Along with retail and cryptocurrency are investments in shares. Retirees traditionally dominated this sector, as they had extra time for stock picking.

But more and more, the young are growing here as well.

“There is a significant trend of young generations taking over the old generations in shares investment,” Boujnah explained.

What comes next for Euronext and European markets?

Euronext previously indicated that it’s ready to acquire more stock exchanges as part of its growth strategy.

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Boujnah said while this was still the case, and Euronext had ongoing dialogues with all European exchanges, there were no willing sellers at the moment. However, that could differ in the future.

“Things change,” he added. “I mean, I remember that at the beginning of 2020, [the London Stock Exchange] made all sorts of public statements saying that Borsa Italiana will never be for sale. And in July 2020 they organised an auction.”

But ultimately, Euronext’s growth will depend on the future of the market, particularly the amount and value of initial public offerings. Boujnah believes 2025 will be a better listings year than 2024 for a number of reasons.

“The main one is the direction of travel on interest rates. I mean, interest rates are going to stabilise and potentially decrease,” he explained.

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Other reasons include exit markets becoming more relevant to now-mature technology companies and issues with the private equity world struggling to raise money.

Overall, these conditions lead to an environment where long-term equity investments are more rewarding, the private equity sector will have less money, and more companies are ready to go public.

“All these elements make me very confident that 2025 will be a good IPO year,” Boujnah said. 

The Big Questionis a series from Euronews Business where we sit down with industry leaders and experts to discuss some of the most important topics on today’s agenda.

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Watch the video above for the full conversation with Euronext.