Holland, often referred to as the Netherlands, is a European nation that borders and shares maritime borders with Germany, Belgium, and the North Sea. Together with its three Caribbean island territories, the nation boasts a population of 17 million citizens and calls itself the Kingdom of the Netherlands, which translated, literally means “lower countries” referring to its low and flat terrain. The country’s cultural capital of Amsterdam lacks the prestige of The Hague, another large city that contains the county’s States General, Supreme Court and Cabinet. Holland also boasts the largest port in Europe, which is also the second largest in the world. The Netherlands ranks as the world’s 18th largest economy by nominal gross domestic product and 28th by purchasing power parity.
Holland’s economy is also fortified by its dense population metrics and immense export of agricultural products which only comes 2nd in the world after the United States. Holland’s mild climate and soil fertility have led the nation to invest highly in its agrarian infrastructure making it one of the most developed in the world. Culturally, the Netherlands is also regarded as one of the most liberal countries on the globe with legalized abortion, prostitution, euthanasia, and a very liberal drug policy. It also established women’s suffrage, same sex marriage, and abolished the death penalty well ahead of most other first-world countries. This article will cover the financial system of the Netherlands, as well as a range of market information covering currency, futures, and stocks.show more
Holland established one of the world’s first financial exchanges as early as 1602 when the Dutch East India company first needed an entity to print stocks and bonds. Originally named the Verenigde Oostindische Compagnie (VOC), it was later renamed the Amsterdam Bourse when it began to formally trade in equities. Many years later in the 1970’s, Amsterdam saw the formation of the European Option Exchange (EOE) for derivatives and options. A decade later, the exchange gave birth to its first stock market index named the EOE index which consists of the 25 largest companies traded within the aforementioned exchange. It is worth mentioning that options, contracts, and some of the more advanced financial instruments were still traded on the Amsterdam Stock Exchange before the exchange’s expansion. In the late 90’s, the Amsterdam Stock Exchange merged with the European Option Exchange and became known as a blue-chip index and was aptly renamed the Amsterdam Exchange, AEX for short. The exchange is currently managed by Euronext Amsterdam.
The Dutch guilder was previously the currency of Holland until the early 2000’s when it was replaced by the euro. It is still used in some of Holland’s outlying territories, however these currencies are somewhat derivative of the actual Dutch guilder as they have their own native identities tied to their currency. The guilder got its name from an old Dutch word meaning golden and was derived from the florin, another antiquated currency.
Currently, the euro serves as the national currency of those countries who have chosen to become a part of the European Union (EU). The euro is the second most traded currency, as well as the second most popular reserve currency in the world, behind the American dollar (USD).
The most widely traded euro pair in the foreign exchange market is the EUR/USD. The euro’s strength is backed by the diversity of the EU and although being relatively new in terms of currencies, it has made quite an impact on the world. One criticism of the currency is that it is too closely tied to the economic superpower known as Germany. During times of economic stress in smaller nations, this can result in additional negative pressure.
The Dutch guilder was the legal tender of Holland from the 1600’s until the country adopted the euro in 2002. During its transition time, the guilder was technically a subunit of the euro as the banknotes had yet been circulated. At that time, the euro was designated only as an accounting entity until the official currency was formally circulated. During this time, physical payments could only be made in guilder. At one point, the French franc was the circulated currency of the Netherlands as Napoleon had annexed the Dutch nation to become part of the French Empire.
Euronext Amsterdam’s three indexes are the blue-chip AEX, mid-cap AMX and small-cap AScX. As an umbrella company that owns a multitude of financial exchanges, Euronext controls Europe’s largest cash equities. Additionally, these exchanges are linked to American stock markets.
Euronext’s 25 most valuable companies are traded on its blue-chip index, and as such, are a reflection of the pillars in the Dutch economy. The main sectors included in these high market capitalization indexes are industrial goods and services, as well as technology and telecommunications. Euronext Amsterdam enjoys the highest share turnover among European markets and can be viewed as a beneficial investment opportunity if thorough research is conducted before investing. As the country also boasts a large and busy port, shipping services and exports are also another good field to search for opportunities.