Heat On Sarbox May Grow As Euro Markets Pass U.S.

Attempts to overturn portions of Sarbanes-Oxley may pick up steam this week after an April 4 report showed the value of European stock markets has overtaken U.S. markets for the first time since World War I.
The seismic shift in the value of equity markets is a further blow to the New York Stock Exchange and other U.S. markets, which have seen some of the larger initial public offerings opt for overseas markets instead of their traditional NYSE home.

Critics of SarbOx blame the recent regulation for pushing the IPOs abroad. They claim the legislation makes compliance in the U.S. too costly.

“We do have deep capital markets. We do have a vibrant economy. But we have been sitting on our laurels thinking we are a country where people would invest,” Wayne Brough, chief economist for Freedomworks, said in a report.

Europe’s 24 stock markets had a market capitalization of $15.61 trillion on March 28, slipping past the $15.60 trillion value for U.S. markets, according to Thomson Financial, which tracks the valuations daily.

At the end of the first quarter a year earlier, the U.S. markets led their European rivals by 4.3 percent. In 2003, that lead was a robust 44.5 percent.

European shares have outperformed the U.S., with market capitalization rising 160 percent since the start of 2003, in dollar terms, Thomson said, versus a 70.5 percent rise for the U.S. market.

Over that time, the euro has risen 26 percent against the dollar.