Brown boosts LSE with Beijing opening

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The Independent Online

London Stock Exchange shares surged yesterday after the Prime Minister opened its new Beijing office and said he would work to attract more Chinese companies to list in the UK.

The LSE is following rival US exchanges by opening in China as international bourses compete to attract Chinese companies seeking to raise capital. Gordon Brown said he would urge Chinese leaders to allow more companies to list on the LSE. The value of overseas initial public offerings by Chinese companies more than doubled last year to $43.5bn (£22.2bn) as 126 businesses listed their shares outside China, according to Bloomberg.

China is encouraging its companies to raise capital locally because it wants to avoid boosting its currency through a capital inflow.

The LSE has not attracted a Chinese listing to its Main Market since Air China's sale in 2004 but the exchange hosted 16 IPOs, averaging $53m, to its AIM market for smaller companies last year.

"I will be asking the Chinese government to consider removing the restrictions on Chinese companies able to raise capital overseas with the aim of doubling the number of Chinese companies listing on the London Stock Exchange in the next five years," Mr Brown said at the opening.

LSE shares surged more than 8 per cent before closing up almost 4 per cent yesterday.

Clara Furse, the LSE's chief executive, said London's lower costs for listing, mergers and legal advice would lure Chinese companies to list in the UK instead of the US.

The LSE was the leading exchange for IPOs last year, hosting $39.6bn offerings and beating the New York Stock exchange by more than $5bn.

"We are the gateway to the eurozone. For Chinese companies or any company that wants to be global and access Europe, London is the place to be," she added.

The New York Stock Exchange and the technology-focused Nasdaq US exchange opened Chinese offices last year.

Mr Brown also said he had invited China's $200bn sovereign wealth fund to open an office in London to invest in British companies.

The Prime Minister said: "Britain will welcome substantial new investment from China in our country in the years to come.

"This will be part of the enhanced strategic interest between our two countries which can be of benefit to both countries and to the world economy."