London Stock Exchange role as fund raising platform for China won’t change after Brexit, says top bourse official

PUBLISHED : Wednesday, 29 June, 2016, 12:50pm
UPDATED : Wednesday, 29 June, 2016, 12:50pm

The London Stock Exchange will continue to be an international fund raising platform for the Chinese government and private companies despite Britain’s vote to leave the European Union last week, according to a senior executive of the bourse.

Brian Schwieger, co-head of equity, funds and fixed income secondary markets and global head of equities products for the London Stock Exchange, said the bourse has listed a number of renminbi denominated bonds and Chinese equities’ exchange traded funds, which acted as the largest offshore yuan centre outside of mainland China and Hong Kong.

“The UK referendum vote for Brexit would not change London Stock Exchange’s role as a fund raising platform for Chinese government and companies,” Schwieger said at an AsianInvestor and FinanceAsia London Stock Exchange Greater China Forum in Hong Kong on Wednesday.

The London Stock Exchange has been strong in listing yuan denominated bonds, including 3 billion yuan in sovereign bonds issued by Ministry of Finance earlier this month, he said.

The bourse also has a number of green bond listings, which is debt issued for the purpose of promoting environmental protection or energy saving projects to reduce pollution. Schwieger said London was the best market for green bonds as it has the experts and track record in this type of fund raising. As an example, the green bond issued by Agricultural Bank of China last year was listed on the London Stock Exchange.

The bourse has also accepted BOC International Holdings as a remote member, while it continues to discuss with Beijing the establishment of a stock connect scheme with Shanghai.

However, Hong Kong based brokers believe the Brexit would reduce London’s attractiveness as it may not be able to act as a financial gateway to Europe due to restrictions on fund flows, including more barriers for London firms wanting to invest in Europe.

Schwieger countered by saying the London Stock Exchange has more than 100 years of history as a fund raising centre and has always been an international fund raising centre.

The Beijing supported Asian Infrastructure Investment Bank (AIIB) would also raise funds for the “One Belt One Road” projects in London in the years ahead, he said.

AIIB vice-president and corporate secretary Danny Alexander said in the same conference that the bank would raise funds for many infrastructure projects which would be important for the development of many Asian countries in the years ahead.

“Lean, clean and green will be our mission,” Alexander said, adding that AIIB will view cost savings, zero corruption and environmental concerns as important considerations in its projects.

Alexander said many of these projects would be of huge scale so they would need to raise funds from the private sector, and London Stock Exchange would be a major platform because it is an international financial market.

He said the Brexit would create uncertainties in the global market but he believes the British government would discuss with Europe plans for future development.

BOC International Holdings chief executive Tong Li said at the same forum that Brexit has triggered depreciation of the yuan in recent days amid market uncertainties, but she said these would not affect China’s continued efforts to open its capital market.

She said the yuan’s addition to the Special Drawing Rights of the International Monetary Fund in October would further boost the need for yuan as an international currency.