Center for Strategic Assessment and forecasts

Autonomous non-profit organization

Home / Economy and Finance / Markets: estimates and projections / Articles
About the situation on leading world stock exchanges
Material posted: -Publication date: 27-09-2007

In recent months, the situation on global stock market remains highly volatile. The crisis, as predicted earlier, begin to dominate in some sectors of the world economy. Against this background, continued to intensify processes of mergers and acquisitions among the world's leading exchanges. Clearly indicated the desire of the American stock exchanges — NYSE and NASDAQ — to get full control over the world's stock market.

According to some estimates, one important event was the statement of the stock market regulator, the PRC, the securities Commission, the authorization for the opening of the Beijing representative office of the new York stock exchange. In the published text said that NYSE was the first foreign exchange to receive such approval in accordance with the new rules of regulation of the stock market of China, which came into force on 1 July 2007 the Experts believe that the rules were agreed in advance with the NYSE in order to give the American stock exchange the advantage of setting up a branch in relation to other foreign exchange applications which have not yet been considered by the Chinese regulator. Is true that the American branch of the exchange opened on the wave of the global financial crisis, caused by problems in the American real estate market. It is not excluded that resignation on 30 August the Minister of Finance of China Jin Janicina for "personal reasons", is directly connected with these events. In other words, the Chinese leadership has a strong American lobby.

One of the most important events of recent months, experts point to the failure of the us exchange NASDAQ to buy the LSE. According to some estimates, this event is regarded as a continuation of competition within the global financial elites for dominance and maintain the status of London as a global financial centre.

The London market managed to avoid a hostile takeover, NASDAQ and even started to strengthen its position by merging with Milan's Borsa Italiana exchange . The merger should be completed in October 2007, after obtaining the approval of regulatory authorities.

The focus of attention of analysts in recent months has focused on potential takeover of the American NASDAQ European exchange — OMX. According to some information, the surprise of the American party in the transaction a third party — the Dubai stock exchange, which also intends to acquire the OMX exchange.

In may of this year, OMX and NASDAQ announced the agreement to merge. It was planned that the capitalization of the combined group, which will be called NASDAQ OMX Group, will be $7.1 billion, the Shareholders of the American company will receive about 72% of the new company, shareholders of a Swedish company — 28%. It was planned that the head Nasdaq Robert Greifeld was to lead the combined company.

However, not so long ago Dubai stock exchange (Borse Dubai) offered to acquire OMX through payment in cash for €2,95 billion At the moment, Borse Dubai already controls 28.4 percent of OMX shares. Characteristically, the acquisition of such a large shareholding were done without required notification of shareholders. This fact caused a negative reaction from the financial Inspectorate of Sweden, which stated that the Arab Borse Dubai violated antitrust laws.

Relationships of OMX and Borse Dubai are very typical for the current General situation on the market of mergers and acquisitions of exchanges — as in the case of the attempted acquisition of the LSE by NASDAQ were involved in illegal practices (such as "raider attacks") establish control over the company. This once again shows all the tensions of this process, and the desire of its members by any means to expand its influence in the global market, even at the expense of their reputation.

A conflict of interest between NASDAQ and the Dubai stock exchange has led to the fact that NASDASQ decided to sell its stake to 31% in the capital of the London stock exchange. Instead British the NASDAQ stock exchange can absorb the Swedish OMX. NASDAQ advisors for a possible deal with 61.3 million LSE shares will perform J. P Morgan Securities Inc. and UBS Investment Bank.

NASDAQ seeks to enter the European stock markets since March 2006 when the company unsuccessfully tried to take over the LSE, in may of this year, NASDAQ announced a possible merger with Scandinavian OMX, the owner and operator of exchanges in Stockholm, Helsinki, Copenhagen, Reykjavik and the Baltic States. Itself the Swedes tend to offer NASDAQ. Thus, in particular, the Chairman of the Swedish stock exchange OMX urban Backstrom noted that the proposal by Borse Dubai looks hostile, and synergistic effect of the proposal NASDAQ is higher than from transactions with Borse Dubai.

Analysts believe that the purchase of assets is a critical OMX to NASDAQ. In their view, if a U.S. exchange does not acquire OMX or LSE, its international capabilities are limited — this in principle is enough to compel NASDAQ to achieve the goal.

It is characteristic that the share of NASDAQ in LSE among other claims state the Qatari company. For 31% of the shares of the London stock exchange Qatari Investment Authority is willing to pay $2 billion, However, analysts say that in this game the Americans can ignore this offer and make a deal with Borse Dubai is Arabic, but only in the event that she refuses to buy Scandinavian OMX to use NASDAQ. In addition to Qataris share on NASDAQ in LSE has claimed some of the parties of the transatlantic NYSE-Euronext, Deutsche Boerse, Chicago Mercantile exchange (CME), the Italian Bank Banca Monte dei Paschi di Siena, the Australian stock exchange (ASX) and the Australian Macquarie Bank. In addition, the British newspaper the Observer, citing anonymous London investment banker reported that NASDAQ itself is interested in selling its stake to the German exchange.

However, according to some experts Borse Dubai in this whole game is not independent, and performs ordering some financial circles, interested in the further promotion of U.S. markets on the European continent, and thus trying to counter the expansion. Some experts say that in this respect the same circles, which stood for the preservation of the independence of the LSE, and the preservation of London's status of world financial centre. For this reason, among the contenders for the stake in LSE serves one of the Qatari companies.

In recent months, analysts noted, also a number of events dealing with exchanges. So, it is noted that the shareholders approved the merger of the term (futures) exchanges of the USA Chicago Mercantile Exchange Holdings Inc. and CBOT Holdings Inc. American CME Group will become the largest exchange for derivatives in the world, under its control will be 85% of U.S. futures and options on futures.

Also, the investment company Goldman Sachs Group plans to buy stake in India's largest commodity exchange — Multi Commodity Exchange (MCX). Negotiations on acquisition of shares in MCX also started the new York Mercantile exchange NYSE, the London metal exchange and the Tokyo commodity exchange.

Thus, in the near future you should expect increasing competition between the financial system of the United States, on the one hand, and Western Europe, the Persian Gulf countries and developing countries on the other. Most likely, this aggravation will occur along the line of the struggle for available energy resources and for new markets the ailing us dollar.

Not random in this situation is the statement by Cuban leader Fidel Castro about a possible repeat of a global great depression. According to him the picture of the world that we see now, highly unstable, and perhaps soon we will face a crisis similar to the one that occurred in the 30-ies of the last century.

Although still the main financial flows are not significantly Ismailis, but began the creation of new tools of the future economy, and able to function efficiently and effectively in future New world order.

One such element is the global stock market, and in particular — the global exchange system. The latter can be considered as a sensitive indicator of future changes in the global economy and financial system, to characterize the orientation of future actions of key world players.

As for Russia, all the events will negatively impact, and in some cases have an impact on the economy.

Given the underestimation of the Russian ruble against the dollar (about three times) we can speak about the corresponding underestimation of the Russian stock market. In this regard, today he is a tasty morsel for global speculators ready to buy up undervalued Russian economy.

The desire to buy up undervalued assets will, in the near future, to intensify the activities in Russia of foreign capital, primarily in the banking sector. Foreign capital will seek to penetrate and in other financial infrastructure such as capital in the Russian stock exchanges.

Upcoming accession of Russia to the WTO will only hasten these processes. Characterized by the fact — once a country joined the WTO, almost immediately the exchange's system absorbed one of the largest global players stock exchange: the American stock exchanges NYSE and NASDAQ, QNX Scandinavian, German Deutsche Boerse. The only exception so far is China, which has preserved the sovereignty of the national exchange system after WTO accession. The absorption of the stock exchanges denying the domestic manufacturers the possibility of forming adequate conditions of competition in the markets that is sure to be used in unequal competition with Russian companies from foreign competitors.

RELATED MATERIALS: Economy and Finance