On July 18, 2019, CENTI Group was glad to be invited to visit London Stock Exchange (LSE) along with students from China Europe International Business School (CEIBS).
London Stock Exchange is one of the world’s oldest stock exchanges and its history dates back to 1571. As the biggest stock exchange in Europe, London Stock Exchange had a market capitalization of US $4.59 trillion as of April 2018.
The keynote speaker, Tracey Paul-Clark, training consultant of LSE, introduced the development history of LSE. Because of the big bang in 1986, the stock market was deregulated and LSE began to allow external corporations to enter its member firms. LSE began to use electronic trading methods such as computers and telephones to replace the traditional face-to-face talk, and there is no physical trading floor anymore.
After the reform, foreign capitals were allowed to buy British listed companies, and the composition and ownership of investment banks and brokerage firms in the City of London have undergone tremendous changes, which established London’s place as the world’s most important financial center as well as highlighted the important position of LSE.
The speaker also introduced us to the FTSE 100 Index, the share index of 100 companies listed on LSE with the highest market cap. She mentioned several listing cases about those companies such as HSBC, M&S, and London Stock Exchange Group. FTSE 100 companies represent about 81% of the entire market capitalization of LSE. The speaker used the real-time closing data to explain how the opening and closing price determined of the FTSE 100 Index. The speaker also interacted with students by letting them guess the closing price of the FTSE 100 Index on that day.
More importantly, the speaker brought us insights about the benefits of listing on LSE as a Chinese or HongKong company. Most of the Chinese companies choose to list in the US or in HongKong. However, the cost of an IPO in the UK is half of that in the US. What’s more, if a company lists on LSE, the market cap and the value of the company will be estimated higher than listed in HongKong.
The keynote speaker invited Min Cheng, the director of the International Marketing Department of LSE, to introduce Shanghai-London Stock Connect, which developed jointly by Shanghai Stock Exchange and London Stock Exchange Group, with the support of both the UK and Chinese governments. The connect brings together one of the world’s largest domestic capital markets with the world’s leading international market. According to LSE, the connect allows global investors to benefit from China‘s growth through London, while London Stock Exchange listed companies will be able to access Chinese investors directly.