Li Xiaojia, president of the Hong Kong Stock Exchange, described the transaction as “the marriage of the Lungang Century”, which will help deepen China-UK economic and trade cooperation.

Editor’s note: This article is from “Huasheng College“, author charlieH.

Editor’s Note: Li Xiaojia, president of the Hong Kong Stock Exchange, described the transaction as “the marriage of the Lungang Century”, which will help deepen China-UK economic and trade cooperation. Take this heavy news to show you about the Stock Exchange.

On September 11th, the Hong Kong Stock Exchange suddenly announced that it has proposed to the board of the London Stock Exchange Group to merge the two companies of the Hong Kong Stock Exchange and the London Stock Exchange. As the London Stock Exchange and the Hong Kong Stock Exchange also achieved the listing of the secondary market, the stock price of the Stock Exchange once rose by more than 15%, but the closing price narrowed to 5.91%.

Get a 20% discount on the HKEx offer, what is the charm of the 200-year-old London Stock Exchange?

Data Source: wind, Huasheng Securities

According to the transaction rules in the announcement, the HKEx will trade 2,045 pence of cash plus 2,495 new shares to trade on the Stock Exchange. The use of pennies here is mainly due to the fact that the stock price of listed companies on the Stock Exchange is usually in the form of a taxi, and currently one pound is equal to 100 new pence. Perhaps the readers are a bit confused. In simple terms, the HKEx has paid a premium of 22.9% compared to the closing price of HK$68.04 per share on September 10. It shows the sincerity of the HKEx and expectations for the success of the transaction.

Get a 20% discount on the HKEx offer, what is the charm of the 200-year-old London Stock Exchange?

Source: HKEx Announcement

Why is the HKEx going to buy the London Stock Exchange?

When you see this message, bigSome people will have doubts about the purpose of the Hong Kong Stock Exchange’s acquisition of the Stock Exchange.

For this question, the answer is given in the announcement of the Hong Kong Stock Exchange’s takeover offer:

First, create a global layout, the world’s leading cross-asset category financial infrastructure group, connect the mature financial market in the West and the emerging financial markets in the East, especially the Chinese market, to better cope with the changing global macroeconomic environment. .

Second, helping the UK to capture new opportunities in the internationalization of the Chinese market and the renminbi as the world’s major reserve currency, consolidating London’s position as the world’s leading offshore dollar and offshore renminbi center.

Third, strengthen Hong Kong as a bridge between China, Asia and the world, and promote the continued opening of capital markets in China through orderly and controllable channels, as well as investment opportunities for fast-growing Asian wealth.

Th. Combining the London Stock Exchange’s global data resources, analytical capabilities, distribution channels and the links between the Hong Kong Stock Exchange and the world’s most digitized emerging economies, China, provides global investors with unique and high value. Data products and services.

V. It is easier for companies to make global financing through the IPO and secondary fund raising markets in London, Hong Kong, Milan and Mainland China (through the HKEx’s interconnection mechanism) market.

Six, providing innovative opportunities in stocks, fixed income, currency, commodities and derivatives products to enhance domestic, regional and global competitiveness; applying leading technology in multiple markets and platforms; and enhancing London and Hong Kong Market transparency, resilience and risk resistance.

Li Xiaojia Blog: Stepping on a new journey to connect the world

The 246-year-old London Stock Exchange

London is currently one of the global financial centers, founded in 1773, 246 years old. However, since 2000, Chinese companies have entered the US to form a trend, and most investors do not know much about the London Stock Exchange and the UK stock market.

The currently recognized world’s three major stock exchanges are the New York Stock Exchange, the London Stock Exchange, and the Tokyo Stock Exchange. The London Stock Exchange is the oldest exchange on the three major exchanges.

The London Stock Exchange Group ranks among the top in the world in terms of listed company data, market capitalization of listed companies, and turnover. As of the end of September 2018, the London Stock Exchange Group had 2,490 listed companies, second only to the Japan Exchange Group, the Toronto Stock Exchange Group and the US Nasdaq Stock Exchange, ranking fourth; the total market capitalization of listed companies reached 4.2 trillion US dollars, ranking 6th in the world; from January to September 2018, the turnover reached 2 trillion US dollars, ranking 7th.

Get a 20% discount on the HKEx offer, what is the charm of the 200-year-old London Stock Exchange?

Data Source: Huasheng Securities

After looking at the trading system, the London stock market has no ups and downs, and the trading time is up to 8 and a half hours. The regular trading time is 8:00-16:30 local time Monday to Friday. The London stock market trades the T+0 system and the T+2 system. Trading order types include market orders, limit orders, stop orders, limit stop orders, hidden limit orders, and intermediate price linked orders.

Get a 20% discount on the HKEx offer, what is the charm of the 200-year-old London Stock Exchange?

Data Source: Stock Exchange, Huasheng Securities

The number of overseas listed companies on the London Stock Exchange is as high as 30%. According to the official website of the Stock Exchange, as of the end of October 2018, among the 2,152 listed companies on the London Stock Exchange, 1511 were from the UK, accounting for 70% of the total. There are 641 listed companies, accounting for 30%, which fully demonstrates the international nature of the London Stock Exchange. Among the overseas listed companies, the number of registered places is mostly in the tax haven Guernsey, Jersey, British Virgin Islands, Isle of Man, Bermuda, Cayman and so on.

Get a 20% discount on the HKEx offer, what is the charm of the 200-year-old London Stock Exchange?

Data Source: Stock Exchange, Huasheng Securities

Global overseas companies are financing on the Stock Exchange with Depository Receipt (DR). The above picture shows that on the London Stock Exchange, 10 of the top fifteen of the offshore depositary receipt transactions from January to August 2019 were Russian financial or energy giants. Of course, you can also see the famous South Korean Samsung and the Dutch X5 retail.

worthIt is mentioned that on June 17, 2019, the Shanghai and London exchanges interconnection mechanism (Huluntong) was also officially unveiled. Huatai Securities became the first Chinese company to issue shares on the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the Stock Exchange. This has important implications for further deepening cooperation and cooperation between China and the world capital market.

The trend of Hong Kong and Lunlian marriage still needs continuous observation

If the Hong Kong Stock Exchange succeeds in reaching the deal with the London Stock Exchange, it will undoubtedly be beneficial to enhance Hong Kong’s position in the global financial system and promote the internationalization of the RMB. However, after receiving the news, the Exchange said that the HKEx’s proposal was unsponsored and would consider the proposal of the Hong Kong Stock Exchange. Li Xiaojia said that he has had initial contact with the London Stock Exchange Group (LSEG); the transaction with the London Stock Exchange will be able to better link the two sides, which is critical; the London Stock Exchange and the Hong Kong Stock Exchange The transaction can fully support the data and index strategy; the premise of the Hong Kong Stock Exchange and the London Stock Exchange trading is to suspend the London Stock Exchange’s acquisition of Refinitiv.

The latest news, investment bank Citi pointed out that the HKEx’s offer to the London Stock Exchange is equivalent to a 42-year P/E ratio of the 2019 financial year of the Stock Exchange, well above the historical average of 22 times. In addition, even if the price is quite attractive to the Stock Exchange, but after the merger or face higher regulatory obstacles, the related transactions have considerable uncertainty. The bank lowered the target price of the Hong Kong Stock Exchange from 285 yuan to 210 yuan, and the rating fell from buying to selling. On September 12, the Hong Kong Stock Exchange opened more than 3%.

The Hong Kong Stock Exchange has successfully acquired the London Metal Exchange seven years ago, and whether this transaction will make us wait and see.

Risk and Disclaimer: The above is only the personal position and opinion of the author. Investors should consider the risks of investing in products in light of their own circumstances before making any investment decisions. If necessary, please consult with a professional investment consultant. This article does not constitute any investment advice and does not make any commitment or guarantee.