London: the route to global investing
London stands in the middle of the world’s trading day. It is open from when the Asian markets are closing, right through to when the American markets are opening and continuing to trade. It is in the ideal time zone to enable Asian investors to manage risk, react to news and pursue their trading strategies constantly and efficiently during and after Asian market hours.
So, it should not be surprising that London is one of the world’s most liquid trading venues for equities, offering products denominated in multiple currencies.
London is the world’s most international exchange – with the largest number of international issuers, members and investors. Non-UK shareholders represent over half the ownership in UK stocks, for example.
For centuries, investors from around the world have trusted the trading infrastructure in London. No other market in the world combines such longevity with modern scale and sophistication.
London’s resilience and experience as a market has been clearly demonstrated by its capacity to sustain trading throughout periods of global market volatility, including that caused by the Coronavirus pandemic.
London has a culture of adaption and innovation. Today, it is developing its ties with Asia, for example London Stock Exchange is committed to serving the growing needs of Asian companies and investors. An ecosystem of market participants connecting the Asian and UK capital markets is being built.
One example of this is Shanghai-London Stock Connect, which enables Shanghai listed firms to raise capital in London. Huatai Securities and China Pacific Insurance were the first two issuers to list GDRs in London under the programme, actively traded by Asian and global brokers. More than $20 billion of Huatai GDRs were traded in the first six months and CPIC GDRs had $110million on exchange turnover during its first ten days of trading.
LSEG’s leading global index provider, FTSE Russell, successfully completed the first phase of inclusion of China A Shares into its global equity indexes in June 2020. It added 25% of the investable market cap of 1,051 small, medium, and large cap China A Shares to the FTSE Global Equity Index Series (GEIS). They are the first international index provider covering different size Chinese A share companies into their indexes.
London’s central time zone means that it is well-placed to help reduce the barriers for Asian investors to trade international securities. London Stock Exchange’s Global Equity Segment (GES) enables Asian investors to trade US blue chips and US-listed Asian ADRs in London. Stocks are admitted to trading in London, with investors being able to benefit from London’s trading hours and trading in US dollars without stamp duty.
Asian investors are becoming increasingly international in their activity – and their interest in gaining exposure to and accessing London’s markets is increasing. The highly diversified London market offers many opportunities for them. There is strong trading interest in stocks in our principal indices such as the FTSE 100 FTSE 250 and FTSE AIM 50. Not only it is home to health care, oil and gas, mining and financial companies, over the past two years, London has seen a surge in technology issuances which has highlighted London’s strong position in tech listings and investor appetite.
Moreover, about 1600 Exchange Trade Products and over 450 investment funds including REITs, have provided opportunities to investors from the East to diversify their investments.
The community of Asian market participants connecting to London Stock Exchange has significantly expanded in recent years. About 300 firms are members of London Stock Exchange and 16 are from Greater China. Several dozen brokers from Asian are also connected indirectly. Along with many global brokers with Asian offices these firms can facilitate access to our markets.
High-quality data in real time and rich information on London Stock Exchange’s products and UK markets is widely available through data vendors and brokers. To strengthen this network and encourage increased participation from Asian investors, we have waived real-time data fee for Asian retail investors for a year, with over 10 data distributors currently signed up to the initiative.
London has been one of the world’s principal financial centres for centuries. Today, its markets are proving strong and resilient in the face of unprecedented trading conditions. In the future, it will continue to innovate and create greater numbers of attractive opportunities for Asian investors.
Head of APAC Business Development, Cash Secondary Markets and UK Account Coverage
London Stock Exchange Group