Toronto has more than ore
Clearly, the planned merger of the Toronto and London stock exchanges makes the main Canadian exchange of great interest to UK investors. That is particularly true for those interested in natural resources, mining, energy and clean technology stocks.
Energy and natural resources giants such as Suncor Energy and Canadian Natural Resources are already listed in Toronto, and the merged group will undoubtedly be the top listings venue in the world for companies in these sectors.
Investors in resource stocks, especially, can therefore expect a combined TMX/LSE to attract the traders and analysts with the greatest expertise in that specialised realm.
And the transaction prices available should be more attractive than those available on other exchanges around the world as a result.
Energy, mining and natural resources will be just one strength of the LSE/TMX Group, though.
The resulting exchange group is also expected to be the world leader for both international listings from emerging and growth markets and small to medium-sized companies, known as SMEs – with approximately 3,600 combined AIM and TSX Venture Exchange listings providing deep expertise in supporting small cap and early stage companies.
Xavier Rolet, CEO of LSE, said: “This is an incredibly exciting merger with considerable growth opportunities. We are creating the world’s largest listings venue for the commodities, energy and natural resources sectors, as well as the premium market for small, mid-size and growth companies.”
The LSE’s £4.3bn merger with TMX is expected to generate cost savings of £35m in the first year and £100m over five years – 8 per cent of its combined cost base.
However, some Canadian politicians have opposed the LSE/TMX match on concerns that the stock exchange is a strategic national asset.
“A Canadian loss of control over its own capital markets alone makes this deal dead on arrival,” said one Canadian columnist, David Olive.
Others have suggested such a giant merger could breach competition laws, either through size or their dominant position in key markets.
Still, if successful, the joining up of the two exchanges will also result in “safer” access to non-energy Canadian blue chip stocks such as Shoppers Drug Mart, Canadian Tire Corp. and Sun Life Assurance for UK investors as shares traded on the new exchange will almost certainly come under the supervision of the FSA.