250 Exchange Invest Weekly Podcast June 22nd, 2024
Transcript:
This week in the parish of bourses and market structure:
ASX Spooks Investors Again!
RIP The Incredible William Donaldson,
& Hello Mega Trillion IT3!
My name is Patrick L Young
Welcome to the Bourse Business Weekly Digest
It's The Exchange Invest Weekly Podcast Episode 250
Good day ladies and gentlemen, this is a very brief reduction of highlights amongst the key headlines from the week in market structure. All the analysis of the many events and happenings from the past 7 days can be found in Exchange Invest daily subscriber newsletter, the unique guide to the bourse business sent daily to your inbox.
More details about how you too can join the ‘exchange of information’ can be found at ExchangeInvest.com
I was delighted last week that the good folks of ICE’s London outpost organized a magnificent soiree to honor the memory of one of the many fine characters who drove LIFFE from business plan to international success story. None other than Nick Carew-Hunt.
Alas, I was not able to make it, but the tributes paid were warm from the floor and the speeches were excellent. Next son Tom Carew-Hunt proved a ‘chip off the old block’ paying tribute to his dear pater. Meanwhile, the finest LIFFE Chairman of them all, Sir Brian Williamson remains a simply magnificent oratorical presence. “Not a dry eye in the house” was the verdict on a typically brilliant intervention by the incredible Sir RBW highlighting the many great facets to Nick's character and his work in making LIFFE happen.
ICE are to be applauded for their increasing maturity in corporate governance and indeed the maintenance of the history of LIFFE.
I think Mark Ibbotson summed it up perfectly “RIP NCH, you were our friend and mentor”.
We and our markets are diminished in Nick's absence.
When it comes to diminished markets, we also felt that on the other side of the Atlantic this week, because let's face it, William H. Donaldson was so awesome it was an injustice to try to briefly summarize what was a sensational business career and before his public service life began, he was an accomplished military officer. Thus this note an Obituary series, but marked as “An Appreciation” was published this week on Medium, LinkedIn and other sources, because I could be here for days and still have barely scratched the surface of an incredible life.
Even living to 93, the great Mr. Donaldson packed an enormous number of achievements into his existence. He was a co-founder of leaving Wall Street boutique, Donaldson, Lufkin & Jenrette (“DLJ” - which was acquired by Credit Suisse in 2000 A.D.) having begun in brokerage working for the great-uncle of George W Bush, Herbert Walker at G.H.Walker & co.
He would go on to chair the New York Stock Exchange in 1990 - 1995 and was called out of retirement (by family friend, President George W Bush) to lead the SEC in the wake of Chairman Harvey Pitt’s retirement.
I had the pleasure of meeting and spending some quality time with William Donaldson in Seoul in March 2011. He was one of the headline speakers, alongside with Jim Rogers at a conference where I was appointed as the “backing band” to the remarkable “WHD.”
He was an absolute gentleman and a fount of knowledge, RIP William H. Donaldson.
The only equivalent I can think for his elk is, well, someone like Bernard Baruch, who achieved the same mix of scintillating private enterprise career mixed with a brilliant legacy of public service a half century before Bill Donaldson. Bill was a great man and our parish again is much diminished with his passing.
Meanwhile, in parish notes this week, I was noting that I created Exchange invest there was no coherent single point of presence for exchange news. This has led to various scoops in our history. One of them took place this week after a great deal of effort and soul searching trying to discern some key data. That was the case of the competitive Mirage where lots of people have been talking about a battle of the bund version 2.0. We could find scant evidence that anything was of that ilk. More on our story about Euribor was to be found this week in Exchange Invest the daily bulletin of the bourse business. You too can subscribe for a mere $375 per annum and I would encourage you to do so because apart from anything else, it subsidizes there's podcasts.
More ways to subscribe and find out information at ExchangeInvest.com.
“All About Donald” was a case on Bitcarnage this week.
The Trumpy one is on a roll right now - he looks as if he has a great chance of winning back the US presidency despite being convicted in the New York court. His big shift in recent days has been to go from crypto cynic to messianically endorsing Bitcoin et al. However, there's a catch and it's the core MAGA protectionist doctrine.
Thus, the daily Beast notes for example, noted Trump former crypto skeptic is going all out to win the Bitcoin bro vote. DJT’s Truth Social posts, I had noted “VOTE FOR TRUMP! and indeed defended the whole concept of Bitcoin mining as, amongst other things, the last line of defense against the CBDC. However, Trump went on to note “We want all the remaining Bitcoin to be MADE IN THE USA!!! It will help us to be ENERGY DOMINANT!!!”
Caps aside in that particular social media message, I've no idea what the energy comment means, but at the same point in time as the Hill picks up on the curious quirk of “America first” on a blockchain, the concept that Trump Says Remaining Bitcoin Must Be Made In US reminds me of a few years back when there was a vogue that banks were eager to get into Bitcoin. However, they were very wary, AML and all that have buying potentially tainted BTC and given you can see where the BTC comes from - it was the believed - a good argument to make ‘virgin’ unused BTC which had been mined from impeccable sources. That didn't really come to fruition as it seems the banks never really bought in. But seriously, how do we treat an American mined Bitcoin under this Trump doctrine, which has since lived in Europe, or China, or heaven forfend had a little dalliance in the wallet of a pariah states such as Iran or North Korea.
If you enjoyed this excerpt you may be interested to know you can read Bitcarnage every day in Exchange Invest. Alternatively, if you want to follow Bitcarnage, the daily update on happenings in the world of crypto and digital assets, you can find it as a standalone on Substack.
Exchange Invest Bitcarnage
Back in the mainstream of bourses, the London Stock Exchange is in serious trouble went the headline in The Spectator.
How long I wonder before the LSEG board starts worrying that LSE is a millstone around their ‘data’ necks and they need a new plan? There certainly appears no coherent concept of rejuvenating the marketplace as… a marketplace. So what is next? Defeat? Closure? A sale to a foreign entity? Selling its stock market would certainly facilitate LSEG moving its listing to the USA, where it might get a fresher multiple than London's rather defeatist market of risk of value cheapsters?
Over in Australia, once again ASX has managed to spook their investors. This time they managed to do it by getting them all into ASX HQ in holding an investor day. Gosh. What a disaster.
The investor briefing was so disastrous, the stock was near freefall closed on the lows Friday a week ago and actually lost more than 10% through the whole farago. It's not clear when ASX management will finally get the message.Their monopoly milking strategy has collapsed in a dismal failure of project management with ludicrous amount spent on technology, consultants and endless plans with no sign of a coherent settlement system or replacement in sight. Investors have lost confidence.
It's not clear there are many intermediaries who have confidence and even the Reserve Bank of Australia, the central bank and ASIC, the regulator are making noises are being fed up with the failure of this de facto state induced monopoly. 25 years ago, ASX was on the crest of a wave as an early adopter of for profit models, and technology having successfully closed open outcry in favour of electronic trading as one of the earliest bourses to do so in the world. While there were some complaints along the way, overall, it was an argument about how best to deliver growth. Right now, ASX has a sorry tale of shambles upon shambles and vast wasted resources, all to no avail whatsoever.
Over in Hong Kong, good progress on DEI, Hong Kong Exchanges rule to end all male boards has bear fruit with no woman directors have already fallen by 50%.
I'm not a big fan of quotas, and particularly not have strictly mandated board diversity, but it falls on all of us to manage and create diverse teams at all levels to enhance our corporate structures and the economy as a whole.
Meanwhile, we had this incredible and exciting moment this week where the mega IT 3 came into play. Yes, ladies and gentlemen, the good news for London was, that its stock market is now Europe's single largest stock market again, thanks to President Macron's suicidal election calling after the European Union elections that has put Euronext Paris into a bit of a tailspin, thus leaving the Paris Stock Exchange down to something like $3.13 trillion, while the UK market is still worth $3.18 trillion, it's probably priced in its next suicidal, reckless spendthrift socialist government.
However, the problems to be found in, we had an earlier table in this week and actually things have been moving so fast that it's been a changing, constantly changing scenario.
When we first started on the table, Microsoft was the biggest company in the world at 3.3 somethingish trillion dollars. Nvidia was in third and Apple was in second. Midweek Apple had jumped to first $3.32 trillion and Nvidia was still third at $3.22. By the time I get to record this podcast we've already seen another changing of the guard as Nvidia has leaped number one, Apple is now number two, Microsoft is number three and we are essentially a whisker hair's breadth of the IT mega three, the three largest companies listed in the United States of America all listed on NASDAQ being worth $10 trillion. That means that each of the IT mega three are worth more than either of the entire market capitalizations of the London Stock Exchange content or Euronext’s Paris content, the French stock market.
What an incredible situation it puts in perspective, the dynamism of the US markets and indeed the complete failure, the utter failure of London and the European Union over the course of the last 15 years since the 2008 meltdown.
In results this week, one set of results from private market Lux Stock Exchange reporting 7% growth in revenues. That gave them in total €40.8 million resulting in a net profit of €10.6 million as the exchange amongst its highest number of new listings since 2007, a quite incredible 13,900 new listings.
However, here's the rub. Lux Stock Exchange at 4% in year in year increase of listings to 42,409 securities, of which there are over 38,000 debt instruments meaning on a very raw gross basis, each security is worth less than 1000 euros in revenue to the Luxembourg Stock Exchange in primary and secondary market activity. That doesn't sound like a great deal to me.
New markets this week, electricity derivatives exchange Electronx has secured 15 million in seed investment. Good luck to them!
Meanwhile, if you're trying to work out where the deal flow is and indeed how you should be looking at the deal flow, don't forget my most recent book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World. It's a way to understand how technology is affecting life and markets. It's published by DV Books and is distributed by Ingram worldwide.
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Don't forget while you're waiting for your copy of “Victory or Death?” arrive check out our live stream Tuesdays at 5 o'clock London time, midday New York time - the IPO-VID Live show! We got so much on there's not going to be a show this week but do please check into what was an absolutely superb show TISE From the Channel Islands to the World! where we interview their highly accomplished CEO Cees Vermaas.
Our “Finance Book of the Week” this week is a classic from Wall Street 85 years young, still as relevant as ever “Where Are the Customers' Yachts?: or A Good Hard Look at Wall Street” by Fred Schwed jr. Funny and fascinating in equal measures looking at the sell and buy side of Wall Street. It remains an evergreen read about the business of investing.
Product news this week, it's the end of an era, trade suspension for three month Euroyen futures on TFEX (Tokyo Financial Exchange), what was originally Tokyo International Financial Futures Exchange when this market was created. Farewell to Euroyen futures on June the 28th with the end of Euribor-based EuroYen cash market quotations at the end of 2024 this year.
Meanwhile CBOE global markets, they're gonna be launching a new US Treasury market volatility index VIXTLT. Should be interesting to see what that does.
Technology news this week, one major win for NASDAQ, the Indonesian Stock Exchange are going to be updating and building out there market infrastructure with the good folks of the NASDAQ technology organization.
Regulation news this week, Mr. Gensler and Mr. Behnam went to the hill. When they marched up the hill they both asked for roughly 9% more in their budgets for the next financial year to the appropriations folk.
Career paths, a senior Deloitte executive has been chosen as the next president of the Stock Exchange of Thailand, Asadej Kongsiri Head of Financial Advisory Services at Deloitte, Thailand will become the 14th President at the Stock Exchange of Thailand, which of course adds to a complete management change, as recently the chairman was also replaced Adjunct Prof Kitipong Urapeepatanapong becoming the 19th President of SET succeeding Pichai Chunhavajira, who resigned to become finance minister.
Also a few changes in the CFTC in particular, CFTC commissioner at Kristin Johnson has been nominated as Assistant Secretary for Financial Institutions the US Treasury, while Commissioner Christy Goldsmith has been nominated as FDIC Chairman while over at the SEC, Caroline Crenshaw has been nominated for another term out the SEC securities regulator.
Over in the UK, the UK’s pension fund has abandoned Britain's stock market. What a truly damning indictment of the UK political classes. Even their pension fund doesn't invest in UK stocks. Allocation to UK stocks has declined by 90% since 2017. That's a disgrace: just 2.3% of the total equity portfolio is in US equities. If anybody ought to have their fortune shackled to the future of the UK, it's the MPs who (allegedly) govern it. Then again what does it say about the London Stock Exchange Group that despite all this proclaiming its great proximity to the Prime Minister's of the past generation, the LSEG has seen MPs pensions leave the London stock market.
…And on a mysterious and magnificent note, thank you for listening to this EI Weekly Podcast 250. Join us daily via ExchangeInvest.com or if you have a new exchange you would like built, get in touch! My name is Patrick L Young and I wish you a great week in life and markets.
LINKS:
The London Stock Exchange Is In Serious Trouble
The Spectator
ASX Investors Spooked By Rising Technology Costs
AFR
HKEX Rule To End All-Male Boards Bears Fruit As Firms With No Women Directors Fall By 50%
South China Morning Post
LuxSE Reports 7% Revenue Growth For 2023
The Chronicle
Electricity Derivatives Exchange Electronx Secures $15m Seed Investment
Yahoo Finance
Trade Suspension For Three-month Euroyen Futures
TFEX
Cboe Global Markets To Launch New U.S. Treasury Market Volatility Index (VIXTLT)
CBOE
Indonesia Stock Exchange Taps Nasdaq To Build Out Market Infrastructure
Nasdaq
Gary Gensler Testimony Before The Subcommittee On Financial Services And General Government
SEC
Senior Deloitte Exec Is Next President Of Stock Exchange Of Thailand
The Nation
'Disastrous For The UK': How The MPs' Pension Fund Abandoned Britain's Stock Market
City AM
Member discussion