Stock Markets Merge

Best Growth Stock – From Germany to New York, London Toronto, Singapore to Australia. Is it over the reign of Wall Street?

It all started last February with pictures and smiles. Drunk with joy, the director of the Deutsche Börse (which operates the Frankfurt Stock Exchange), Reto Francioni, and the head of the New York Stock Exchange (NYSE), Duncan Niederauer, surprised the world by announcing the merger of the Stock Exchange Frankfurt to Wall Street, two of the most important financial centers of the Earth.

Francioni managers and Niederauer presented concrete plans. German direct from Frankfurt financial derivatives trading and the gringo in New York will be responsible for the sale of shares. Corporate HQ is located in Amsterdam. And after long fights and some jokes (one commentator acutely proposed the name ‘Wall Straße’ (combining English and German from the original name of the NYSE), and even know how to baptize the baby: DB NYSE Group.

The news came as a bomb in the world financial markets. “That one of the true symbols of America moves into the hands of the Germans shows how things are for world power,” said an analyst in El Blog Salmon, specializing in economics and finance. Others felt that this merger could mean the end of Wall Street so far as is known and others said definitely the World Financial Center New York will lose importance. But there were also those who received the announcement as simply a strategic business between two companies.

The automated electronic stock exchange largest U.S., the Nasdaq OMX, reacted with prevention and nervousness. Felt large animal steps. The first of April, Robert Greifeld, president of the technology stock, challenged the Deutsche Börse and the NYSE introduced him to a lucrative offer to merge to compete with the Germans. Greifeld offered U.S. $ 11,300 million (one million more than the Germans), of which almost two million would be paid in cash. The new proposal sounded so attractive that many thought that the bridge between Frankfurt and New York would break.

Nasdaq’s intention in the business of intermediating between NYSE and Deutsche Börse left gaping financial experts on both sides of the Atlantic and caused irritation, especially in Germany, where he had assumed the business with Wall Street and where commentators rather than a merger, a takeover had been triumphantly machined from the skyscrapers of Frankfurt: the end, the Germans would remain with 60 per cent stake.

“It is childish that the Nasdaq offer this right now (…). I could have done before, because the idea is not new,” wrote the German newspaper Süddeutsche Zeitung in an editorial clearly torn. “It’s like when a child sees another doing something and tells his mother: ‘Mommy, I want …!'”.

Some analysts believe that Nasdaq’s offer has exposed the atmosphere of despair that has lived for months in the stock exchanges in the United States.

To reassure the Germans, last week the board of the New York Stock Exchange announced that it rejects takeover bid from Nasdaq and continued negotiating with the German Stock Exchange.

The reasons for rejecting the offer has to do with the concern that generated the same proposal. To compete with the amount offered by the Germans, Nasdaq had to ask for a credit millionaire. The credit amount is so huge that the financial control bodies burned gringos alarms, since there appears to be no assurance that Nasdaq can return the money on time.

In addition, a merger between NYSE and Nasdaq could mean a violation of the U.S. Poster, which is very strict when it comes to punish monopolies.

The NYSE’s decision to reject Nasdaq’s offer was held on the banks of the River Main, for a merger with Wall Street become the hub Frankfurt-Amsterdam-New York in the square stock trading and financial derivatives world’s largest. Its value would rise to 26,000 million dollars, leaving far behind the bags of Singapore, Brazil, London and other U.S. and eventually exceeding the Hong Kong Stock Exchange, which today holds the title of king of the world stock markets.

Experts say the NYSE knows that a merger with Frankfurt is promising and would have historic proportions. On both sides of the Atlantic alliance plans have been reminded of the golden times that Daimler-Benz automobile empire merged with U.S. giant Chrysler.

Market in a few hands

The truth is that the world is facing deeper consolidation of the stock market. The deal between Wall Street and the German stock exchange is not anything. The NYSE Euronext, in addition to owning the New York Stock Exchange, also is listed in Paris, Amsterdam, Brussels and Lisbon and the Liffe derivatives market. For its part, the Deutsche Börse has the main German stock exchange and half of Eurex, other derivatives market.

For several months the pressure on the stock exchanges has been growing. Emilio Echevarria, president of Bancolombia Securities brokerage firm, says that the growth of alternative platforms like the Internet has led to falling margins for many stock and have to re-examine the business, “so we are seeing marriages every day to gain economies of scale. ”

Indeed, two months ago was met another giant merger, Anglo-Canadian this time, between the operator of the London Stock Exchange, London Stock Exchange (LSE) and the Toronto Stock Exchange, TMX Group. In this case, London, also owns the Italian Stock Exchange, would control 55 percent of the new group. “The major exchanges in Russia, Micex Group and RTS, said they plan to join, and the Singapore Exchange in October offered U.S. $ 8,300 million for all outstanding shares of ASX, the Australian stock exchange operator.”

The NYSE Euronext bought in 2008 there was another transatlantic acquisition: the owner-operator Nasdaq OMX bought from Scandinavian. More mergers will come, says this means. “We should surprise more movement between the companies that own stock markets around the world,” said the Spanish financial daily Expansion.

The truth is that the business of stock exchanges in New York and Germany stimulate the appetite of other broad alliances. To not go very far in the region and wedding bells ring. Earlier this year, announced the first international merger of two stock exchanges in Latin America, where the main actors in Colombia and Peru. Under the agreement, Colombia would Bag 64 percent of the merged entity and that of Lima, 36 per cent. For the president of the Stock Exchange of Colombia, Juan Pablo Cordoba, the transaction will create value for investors in both countries as possible to develop a larger market and more diversified. The new bag will have 313 companies listed, which means that investors will find in future a more varied menu to invest while companies will have a larger market to find financing through stock issues or corporate bonds. Last year, it had announced the integration of markets in Colombia, Chile and Peru in Mila (Integrated Market Latin America). The operations will begin on May 30.

As shown, the world is experiencing a fever of mergers in the securities markets. The list of potential partners to lead the London Stock Exchange or the Singapore Stock Exchange in Australia. “A merger with Nasdaq would provide access to foreign markets to U.S. markets.” Many have thought of Hong Kong as a possible partner in NASDAQ. But the point is that in addition to purely economic reasons, politics plays a crucial role. If it is difficult for Americans to accept that the German exchange is taken to Wall Street with Germany a strong ally of the United States, no one imagine that China is left with another big bag. But the truth is that globalization seems to have no limits.