News & Analysis

London Stock Exchange's own shares head for the sky as listed firms launch buybacks

Andrew Saks, Friday, 6 August 2021

Today, the stock price of an actual stock market is in the spotlight.

London Stock Exchange Group, which is, perhaps unsurprisingly listed on the London Stock Exchange, is the subject of some very interesting moves this morning.

London Stock Exchange Group PLC, which is a major stock exchange and financial information company headquartered in the City of London, is publicly listed on its own trading venue which is an interesting scenario.

Today, London Stock Exchange Group's share price rose significantly to £77.26 per share, which is a 3.96% rise over yesterday's price, which may have been influenced by data that has been released showing that London-listed firms have launched share buybacks with a value of some £14 billion so far this year, including 14 FTSE 100 firms, according to figures from stockbroking company AJ Bell.

It's a significant turnaround from 2020, when share buybacks with a value of more than £10billion were scrapped as companies grappled with the effects of the lockdowns. Just £1.6 billion were approved and carried out from March to December 2020.

The sharp upward movement in London Stock Exchange Group's share price this morning represents a significant 4.49% rise on the five-day average and means that it is trading considerably higher than it has done all of this week.

London Stock Exchange Group's buoyancy could well be also backed by the company's ownership of some major trade clearing, listed market data and exchange firms which have all been performing very well indeed this year, including Refinitiv which has been conducting some very shrewd M&A deals, LSEG Technology, the prestigious FTSE Russell index which has included several SPAC companies recently, as well as dominant clearing firm LCH.Clearnet and Tradeweb.

In 2007, London Stock Exchange Group PLC was created following the acquisition of Milan-based Borsa Italiana for 1.6 billion euros. The combination was intended to diversify the LSE's product offering and customer base. The all-share deal diluted the stakes of existing LSE shareholders, with Borsa Italiana shareholders receiving new shares representing 28% of the enlarged register.

Since then, London Stock Exchange Group PLC has been increasing its remit, and has conducted various mergers with major venues globally, making it one of the most fiscally strong, non-volatile stocks in the world, largely because it holds some of the most stable and prestigious stocks of blue-chip companies on its trading venue.

In the past week alone, Natwest, Shell and BP have announced very large buyback programmes after posting soaring profits.

Shareholders can either opt to sell their shares back to the company in exchange for a pay out or they can hold onto the shares. For shareholders the benefit is that the offer is usually made at a premium to the market price to make it attractive.

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