On February 9, 2025, French President Emmanuel Macron unveiled a €109 billion investment strategy at the AI Action Summit in Paris, aimed at bolstering France’s AI capabilities. The goal is to enhance Europe’s competitiveness in the AI sector, currently dominated by the U.S. and China. While this financial commitment signals Europe's intent to participate in the AI Race in AI, there’s a major obstacle standing in the way: Europe’s capital markets. Without critical reforms in liquidity and investment infrastructure, Europe’s tech and AI companies may struggle to scale effectively and compete on the global stage.

The State of European Tech IPOs and Investment

Declining Activity in Public Markets

Tech IPOs in Europe have significantly slowed in recent years, driven by a combination of factors:

• Economic uncertainty: Market volatility has reduced investors’ appetite for risk.

• Regulatory complexity: The process for listing on European exchanges remains fragmented and inconsistent.

• Private funding dominance: Venture capital and private equity are increasingly seen as more attractive alternatives, allowing companies to delay public offerings indefinitely.

Challenges in Accessing Growth Capital

European venture funding saw a steep decline in 2024, dropping to $45 billion, down from $101 billion in 2021. Late-stage funding, in particular, has dried up, leaving many companies struggling to secure the capital they need to scale. In contrast, the U.S. attracted over $130 billion in tech startup investments during the same period, underscoring the relative strength of its funding landscape.

Structural Barriers in European Capital Markets

Market Fragmentation and Low Liquidity

Unlike the U.S., where platforms like Nasdaq and the NYSE offer centralized and liquid markets, Europe’s capital markets are spread across various national exchanges, including Euronext, the London Stock Exchange, and Deutsche Börse. This fragmentation leads to reduced liquidity, greater volatility, and ultimately lower investor confidence. The result? Fewer high-growth companies are choosing to go public within Europe.

The Shift Toward Private Funding

European tech firms are increasingly opting for private financing, which offers substantial capital without the scrutiny and transparency that comes with public markets. While this may provide short-term flexibility, it has some long-term consequences:

• Limited opportunities for retail investors: High-growth tech investments remain largely out of reach for everyday investors.

• Delayed emergence of large tech players: Many firms either stay private for longer or seek listings on U.S. exchanges, bypassing European markets.

Regulatory Disparities

The IPO process across European exchanges can vary significantly, creating unnecessary hurdles for companies looking to go public. In contrast to the streamlined procedures offered by the U.S. Securities and Exchange Commission (SEC), European firms must navigate a labyrinth of national regulations, making the process more cumbersome and less attractive. A more cohesive and unified regulatory framework is crucial for creating a level playing field for tech companies.

Reforming European Public Markets

Improving Market Liquidity

For European exchanges to regain their attractiveness, we need to focus on:

• Reducing market fragmentation: Encouraging collaboration between major exchanges across Europe can help improve liquidity.

• Attracting more investors: Simplifying the investment process and offering tax incentives can help draw in retail investors.

• Increasing institutional participation: Adjusting regulations to make it easier for institutional investors, such as pension funds and sovereign wealth funds, to participate in European markets.

Encouraging IPOs

To make public markets a viable option for tech companies, Europe could consider:

• Streamlining listing procedures: Aligning regulatory processes across EU member states would reduce complexity and make going public more appealing.

• Introducing financial incentives: Tax breaks or grants for companies pursuing IPOs could help offset the costs of going public.

• Stabilizing post-IPO markets: Ensuring liquidity and providing institutional backing can help maintain investor confidence after IPOs.

Case Studies: European Tech IPOs

Raspberry Pi’s London Listing (June 2024)

• Initial Share Price: 280p

• Market Capitalization at IPO: £542 million

• Stock Performance: Increased by 33% to 379p by September 2024

• Revenue Growth: $144 million in the first half of 2024

Raspberry Pi’s IPO was a success, underscoring the potential of London’s stock market. However, concerns about broader liquidity challenges remain, and there are doubts about the long-term viability of similar listings in Europe.

LightOn’s Paris IPO (November 2024)

• Europe’s first generative AI company to go public

• Specializes in Optical Processing Units (OPUs) for AI

• Clients include Safran and CNES (French Space Agency)

LightOn’s IPO marked a significant achievement for Europe’s AI sector, but its relatively low trading volumes highlight the ongoing liquidity issues on European exchanges, particularly Euronext Growth® Paris.

HBX IPO in Spain (February 2025)

• Parent company of Hotelbeds

• Share Price: €11.5

• Valuation: €2.84 billion

• Funds Raised: €725 million

HBX’s IPO was one of the largest in the Eurozone in 2025, reflecting renewed interest in the technology and travel sectors. However, success stories like this one alone don’t signify a systemic improvement in the overall European capital markets.

Conclusion: Overcoming Market Challenges as a Strategic Necessity

Macron’s AI investment plan is an important step in positioning Europe as a player in AI. However, the success of this initiative will depend largely on reforms in Europe’s capital markets. Without steps to improve liquidity, simplify regulatory processes, and foster a more dynamic IPO environment, Europe’s tech firms will continue to face significant challenges in scaling and competing globally. Strengthening public markets is not just critical for AI growth, but also for ensuring Europe’s broader economic resilience and maintaining its global influence.

Sources: European Commission (ec.europa.eu), European Central Bank (ecb.europa.eu), Euronext (euronext.com), Deutsche Börse (deutsche-boerse.com), London Stock Exchange (londonstockexchange.com), PitchBook (pitchbook.com), McKinsey & Company (mckinsey.com), CB Insights (cbinsights.com), Reuters (reuters.com), TechCrunch (techcrunch.com), Financial Times (ft.com), World Economic Forum (weforum.org), OECD (oecd.org).

Liquidity: It’s More Than Just Big Names

If mega-caps were the whole story, then mid and small-caps would trade at similar levels on both sides of the Atlantic. Spoiler: they don’t. The liquidity gap extends across company sizes, showing that deeper factors are at play.

The Numbers Tell the Story

Here’s the hard data:

1. Trading Volume: US mid-cap stocks trade 2-3 times more than their European counterparts. Small caps? 4-5 times more. A deeper pool of buyers and sellers makes all the difference.

2. Bid-Ask Spreads: US stocks have 30-50% tighter spreads, making them smoother and cheaper to trade. When transaction costs are lower, investors are more active.

3. Institutional Interest: US mid and small caps attract way more big-money investors, keeping liquidity flowing. European stocks? Not so much. Without large institutional support, markets become sluggish.

4. Turnover Ratios: US small and mid-caps change hands more frequently, reflecting a market where price discovery happens faster and capital moves more efficiently.

Why the US Leaves Europe in the Dust

It’s not just about company size. The US market has fundamental advantages:

• Retail Traders Make Waves: Commission-free trading, retirement accounts, and an investment culture keep retail money moving. Europe is still playing catch-up. Retail investors in the US actively trade, adding a crucial liquidity layer.

• One Market, One System: The US has a unified market structure. Europe is fragmented, with different exchanges and rules adding friction. Every added layer of complexity slows down trades and makes investing less attractive.

• Market Makers Keep Things Fast: The US has a powerhouse network of market makers and high-frequency traders ensuring constant liquidity. Europe? Not nearly as much. Automated trading in the US ensures that there’s always someone on the other side of a trade.

• More Research, More Coverage: US mid and small caps receive significantly more analyst coverage, increasing investor confidence and participation. In Europe, many small caps go under the radar, leading to lower trading volumes and more illiquidity.

Bottom Line: The Liquidity Gap is Real

Blaming liquidity differences on mega-caps is missing the point. Even in mid and small caps, US stocks are simply easier and cheaper to trade. The solution isn’t just to grow bigger companies—it’s about overhauling market structures, getting more investors in the game, and making trading seamless.
Liquidity isn’t an accident. It’s built through active participants, efficient structures, and a culture of investing. The US has mastered this formula. If Europe wants to compete, it needs to rethink how its markets function and create the conditions for true liquidity to thrive.

Market Makers: Profit First, Market Health Second?

Market makers are like the middlemen of the trading world. Their job is to ensure there’s always someone to buy or sell a stock. They make money by capitalizing on the bid-ask spread—that tiny difference between the price they’re willing to pay to buy a stock and the price they’re asking for to sell it.

Their main focus? Profit. They are in the game to make as much money as possible, and their trading strategies revolve around this. While market makers do add liquidity by being ready to trade at any moment, they don’t really care much about the market’s health after they’ve made their profit. This can sometimes lead to increased price volatility or other market issues, especially in unstable conditions.

So yes, market makers are crucial in providing liquidity, but their focus on short-term gains can occasionally come at the expense of overall market stability.

Key Characteristics of Market Makers:

• Profit-driven: The main focus is on profiting from the bid-ask spread.

• Short-term outlook: Less concern for the long-term effects on market liquidity and quality.

• Limited focus: Primarily concerned with spread optimization, which can be insufficient for ensuring market stability during uncertainty.

Liquidity Providers: The Long-Term Players

On the flip side, liquidity providers take a much broader approach. These entities are more focused on maintaining and improving market quality. Companies typically hire them to ensure that their stocks remain liquid—meaning people can buy and sell without large swings in price or significant delays.

Liquidity providers don’t just look at the bid-ask spread. They monitor and improve other factors like market depth (how many shares are available to trade), price stability, and volatility (how much a stock’s price fluctuates). Their goal is to ensure a stable market that can handle big trades without causing price spikes or drops.

While market makers are mainly concerned with their profits, liquidity providers work to make the market better overall. This means they’re especially valuable during periods of uncertainty or market stress, helping to smooth things out when markets get rocky.

Key Characteristics of Liquidity Providers:

• Market quality-driven: Their primary focus is on enhancing market quality through liquidity improvement.

• Multiple variables monitored: Besides the spread, liquidity providers optimize volatility, market depth, and price resiliency.

• Long-term focus: Better liquidity management, even under uncertain market conditions.

Why This Matters to You

Whether you’re an investor or a company looking to list on a stock exchange, understanding the difference between these two players is important. Market makers offer quick liquidity, but liquidity providers ensure the long-term stability of your stocks.

For companies, having a liquidity provider means you can be confident that your shares won’t be subject to wild price swings just because someone wants to buy or sell a large chunk. For investors, knowing that liquidity providers are in the mix can mean more confidence in placing big orders without causing a big shift in the stock’s price.

The Bottom Line

Market makers and liquidity providers each play a vital role in financial markets, but they do it in different ways. Market makers focus on profit through quick trades and optimizing the bid-ask spread, but they don’t always have the market’s long-term health in mind. Liquidity providers, on the other hand, are all about maintaining market stability and quality, ensuring that the market remains liquid and stable even when things get unpredictable.

Understanding the role of each can help you navigate the markets more effectively, whether you’re trading stocks or issuing them.

What are Dual Listings and Dual-Class Shares?

Dual Listings: Accessing Global Investor Bases

A dual listing allows a company to simultaneously list its shares on two different stock exchanges, expanding its access to diverse pools of investors. This strategy is particularly beneficial for firms with global operations, as it enhances visibility and liquidity across multiple regions. A leading example is Alibaba, which is listed on both the New York Stock Exchange (NYSE) and the Hong Kong Stock Exchange (HKEX). This dual listing allows Alibaba to access broader investor bases and stabilize its stock prices through increased liquidity.

Dual-Class Share Structures: Control with Capital

In contrast, dual-class shares allow companies to issue multiple classes of shares with different voting rights. Typically, founders or top executives hold shares with greater voting power, enabling them to retain decision-making control. This structure is popular with fast-growing companies, especially in tech, which prioritize leadership stability while raising substantial capital. Xiaomi and Meituan Dianping are notable examples of companies utilizing this structure in their Hong Kong listings.

Regional Trends: Hong Kong and Singapore as Key Players

Hong Kong: A Global Hub for Dual Listings

Hong Kong has become a hotspot for dual listings, particularly for Chinese companies seeking to mitigate US regulatory pressures while maintaining access to global capital. The deep liquidity of the Hong Kong market, combined with its strategic proximity to mainland China, makes it a key destination. Alibaba's 2019 listing on HKEX is a textbook example of how dual listings can enhance liquidity by attracting Asian investors while retaining a US market presence. In addition, Hong Kong's regulatory reforms in 2018, which legalized dual-class share structures, have further increased its appeal to tech giants like Xiaomi. These firms benefit from maintaining leadership control while accessing significant capital from both institutional and retail investors.

Singapore: Boosting Liquidity Through Strategic Partnerships

Singapore is emerging as a global financial hub by forging innovative partnerships. In 2023, SGX partnered with Nasdaq to facilitate dual listings, allowing companies to tap both Asian and US capital markets. This collaboration creates a seamless pathway for tech and high-growth companies to expand their liquidity by accessing diverse investor bases while simplifying regulatory requirements. Like Hong Kong, Singapore adopted dual-class share structures in 2018 to attract tech firms and family-owned businesses. Companies like Grab could benefit from these flexible listing options, ensuring they raise the necessary capital without losing governance control.

The Role of Liquidity in Dual Listings and Dual-Class Shares

Why Liquidity Matters

Liquidity—how easily shares can be traded without impacting the stock price—is crucial for the success of dual listings and DCS structures. High liquidity reduces price volatility, making it easier for companies to attract investors and raise capital. Dual listings significantly improve liquidity by expanding access to investors across different markets. Alibaba’s dual listing in New York and Hong Kong illustrates how this strategy can help companies benefit from a larger, more diverse pool of investors. In Singapore, the SGX-Nasdaq collaboration is designed to address liquidity issues by enabling companies to access two large investor bases, mitigating the risk of regional market volatility.

Liquidity Concerns with Dual-Class Shares

While dual-class shares allow companies to retain control, they can also deter some institutional investors who prefer equal voting rights for all shares. This can potentially reduce liquidity, as a smaller pool of investors may be willing to buy such stocks. However, in markets like Hong Kong, where tech firms dominate, dual-class shares have continued to attract active trading due to the scale of the companies involved and favorable regulatory environments.

Benefits and Challenges of Dual Listings and Dual-Class Shares

Benefits:

Access to Larger Capital Markets: Dual listings provide access to a broader range of investors, making it easier for companies to raise capital. Companies like Alibaba and Xiaomi can attract both US and Asian investors by listing on multiple exchanges.

Enhanced Liquidity: Dual listings significantly improve liquidity, as shares are traded in multiple markets. This helps stabilize stock prices and reduces the risk of market manipulation.

Strategic Control: Dual-class share structures allow key executives to retain control over strategic decisions while raising substantial capital. This is crucial for high-growth companies like Meituan Dianping, which prioritize leadership stability.

Challenges:

Higher Costs and Complexity: Managing compliance across multiple exchanges can be expensive and complex. Companies must navigate distinct regulations and maintain transparency with investors in different markets.

Governance Concerns: Dual-class share structures can raise red flags for institutional investors concerned about corporate governance, potentially leading to reduced liquidity.

Regulatory Risks: Companies with dual listings are subject to the regulatory environments of multiple countries. For example, Chinese companies listed in both the US and Hong Kong face the risk of delisting from US exchanges due to political tensions.

Why Monitoring Liquidity in Cross Listings is Crucial

Companies with dual listings must monitor liquidity closely, as it directly impacts their ability to raise capital and maintain a stable stock price. Insufficient liquidity can lead to price volatility, confusing investors and affecting market confidence. For instance, low trading volumes on one exchange may cause price disparities between the two markets, creating confusion. Effective liquidity management across multiple exchanges helps companies stabilize share prices, attract a wider investor base, and minimize the risk of illiquidity. This is especially critical for global firms and high-growth tech companies that rely on investor confidence for long-term success.

Conclusion

Balancing Capital and Control Dual listings and dual-class share structures provide powerful tools for companies looking to expand their access to capital markets while retaining control. However, these strategies require careful liquidity management to ensure long-term success. As global markets evolve, companies must weigh the benefits of increased capital access against the complexities of governance and liquidity to thrive in today's dynamic financial landscape.

Why Singapore Stocks Are Increasingly Using Share Buybacks

Across the Singapore market, companies are using share buybacks to manage short-term volatility. In uncertain global markets, share repurchases help stabilize stock prices, reducing the fluctuations that often unsettle investors. By reducing the number of outstanding shares, companies can artificially inflate stock prices, which often benefits executives tied to stock-based compensation plans.

Additionally, share buybacks provide a flexible way to return excess cash to shareholders without committing to regular dividend payments. This flexibility makes buybacks particularly attractive when the trading market is uncertain, as companies strive to keep stock prices stable.

The Risks of Shrinking Float in Stock Trading

While share buybacks may offer short-term gains, they lead to a reduction in liquidity over time. As companies repurchase shares, the available float in the secondary market decreases. This shrinking float makes it harder for investors to trade stocks without impacting prices, especially in a smaller financial market like Singapore.

Consider Company S, which launched an aggressive share repurchase program in 2021. During certain periods, its buybacks accounted for up to 83% of the daily trading volume on the SGX. On multiple occasions, Company S’s purchases made up 100% of the volume on the exchange, raising serious concerns about low liquidity in the market. This dominance in trading activity distorts the stock market, making it difficult for outside investors to buy or sell shares without causing significant price shifts. Essentially, the company became its own market maker, artificially inflating its share price.

In the long run, this reduction in liquidity can make Singapore stocks less attractive to institutional investors who require larger volumes of shares for their trading strategies. Reduced liquidity limits a stock’s ability to attract long-term investors and may ultimately impact its valuation.

Comparing the Singapore Stock Market with Regional Players

Compared to other regional markets, such as the Hong Kong Stock Exchange and Malaysia, Singapore's stock market shows a higher dependence on share buybacks. For instance, companies listed on the Hong Kong Stock Exchange maintain a larger float, ensuring sufficient liquidity for both institutional and retail investors. This liquidity makes the Hong Kong market more attractive for long-term investors who seek predictability and ease of trading.

Although Hong Kong and Malaysia have similar rules regarding share repurchases, companies in those markets tend to stay within their volume limits. In contrast, many SGX-listed companies often exceed the 30% daily volume limit imposed by the Singapore Exchange, raising concerns about market manipulation and potential distortions in the trading market.

Long-Term Impacts on Liquidity in the Singapore Stock Market

If the trend of excessive share buybacks continues, the long-term consequences could be damaging for Singapore's financial market. Reduced liquidity in the stock market makes it difficult for new investors to enter, and for existing shareholders to exit, without causing drastic price fluctuations. Moreover, companies risk alienating institutional investors, who prioritize liquidity when deciding where to invest their capital.

The shrinking liquidity in Singapore's stock market could also put SGX-listed companies at a competitive disadvantage compared to firms listed on the Hong Kong Stock Exchange, where higher liquidity trading makes stocks more appealing. Hong Kong companies are less likely to manipulate trading volumes through buybacks, offering a more stable and predictable environment for investors.

Conclusion: Can the SGX Sustain Long-Term Liquidity?

While share buybacks have provided short-term relief for many SGX-listed companies, the long-term risks are becoming increasingly apparent. Shrinking liquidity in the Singapore stock market could harm investor confidence and market stability. Without regulatory adjustments or alternative liquidity strategies, SGX-listed companies may struggle to compete with their regional counterparts on the Hong Kong Stock Exchange and Malaysia, where larger floats and more liquid markets offer greater investor confidence.

The key question remains: Can Singapore’s buyback-heavy market sustain itself in the long term, or will the over-reliance on share repurchases lead to a liquidity crisis that hampers the growth of Singapore stocks and the overall financial market?

Innovation et Technologie à l'Œuvre

L'approche de DeltaBlock se distingue par une solution algorithmique capable de doubler la liquidité des titres tout en réduisant les ressources financières nécessaires par cinq. Leur technologie innovante est issue de sept années de recherche dans les microstructures des marchés et est déjà mise en œuvre à Singapour. Cette capacité à améliorer substantiellement la liquidité sans les coûts habituels représente une avancée significative pour les marchés des capitaux.

Ciblage et Mission

DeltaBlock vise en particulier les entreprises avec une capitalisation de moins d'un milliard de dollars. Leur mission est de démocratiser l'accès à la liquidité pour ces entreprises, leur permettant de rendre leurs actions plus attractives et d'attirer davantage d'investisseurs. Cela améliore également la juste valeur de marché de ces entreprises et contribue à un écosystème de marché plus équilibré et dynamique.

Impact Futur et Vision

Avec les nouveaux fonds, DeltaBlock prévoit d'étendre son impact en explorant de nouvelles applications de sa technologie et en introduisant des améliorations continues grâce à des algorithmes auto-apprenants. Leur objectif est de transformer l'accès à la liquidité, favorisant ainsi un univers financier plus inclusif et équitable.

Pour en savoir plus sur les détails de cette innovation qui pourrait transformer le secteur des PME cotées, vous pouvez lire l'article complet sur FinMag ici: DeltaBlock 2024: Révolutionner l’accès à la liquidité pour les PME cotées.

Fintech startup DeltaBlock has successfully secured €1.25 million in a recent funding round, setting a new benchmark for its innovative financial technologies designed to enhance market liquidity for small and mid-sized enterprises (SMEs). The fundraising event underscores the market's confidence in DeltaBlock's groundbreaking solutions and its potential to redefine financial markets.

Breaking New Ground in Financial Markets

Founded by Maria Silvia Scetta and Hamza El Khalloufi, DeltaBlock addresses one of the capital market's enduring challenges: the limited liquidity facing SMEs listed on stock exchanges. Their proprietary technology, developed over seven years of meticulous research, leverages advanced algorithms to double the liquidity of a stock while using significantly fewer financial resources compared to traditional methods.

The Technology Behind the Success

DeltaBlock's algorithmic solution enhances the tradability of shares, effectively reducing the liquidity discount often associated with SMEs and allowing these companies to be valued more accurately on the market. This technological advancement not only supports the financial health of smaller companies but also fosters a more balanced and dynamic marketplace.

Expansion and Future Aspirations

Having launched its operations in Singapore, with a strategic base in Paris, DeltaBlock is now poised to expand its reach throughout Europe and beyond. The fresh capital will bolster R&D efforts and further the deployment of its innovative technology across new markets.

A Vision for a More Inclusive Financial World

The company's mission extends beyond financial gains, aiming to democratize access to liquidity and visibility for less liquid companies. By doing so, DeltaBlock aspires to create a more equitable financial ecosystem where all companies, regardless of size, have fair access to capital markets.

DeltaBlock's recent funding round is not just a financial win; it's a promising development for capital markets worldwide. As they continue to innovate and expand, DeltaBlock represents a beacon of progress in the fintech sector, ensuring that smaller market players are no longer sidelined by the limitations of traditional financial systems.

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