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On the money

At last week’s annual meeting of the London Stock Exchange shareholders were reminded just how important the international share listings business is and how London is on a roll

More that £10.4 bn was raised for business on the London Stock Exchange in
the first six months of this year which was a 64% increase on the same period of
2005.
A total of 194 companies had listed with 40 on the main market and the balance
on AIM. Of the total, 50 were foreign from 15 different countries.

In comparison, and to underline just how far in the lead London is, in the
period to the end of May there were just 15 foreign listings on the New York
Stock Exchange and Nasdaq combined.

It is worth remembering this amid all the controversy surrounding Rosneft,
the Russian oil company which has rather dubiously acquired and now owns the
bulk of the assets of Yukos, a company targeted by the Kremlin and effectively
forced into bankruptcy by it. There is a strong body of opinion in the City
which says Rosneft should not be allowed to float in London.

But there is an equally strongly held view that the best way to encourage
change for the better in Russia is to allow the company to float.

This side holds that the political risk and patchy corporate governance mean
the Rosneft shares trade at a discount to other oil companies.

This obvious loss of value puts a price on the Russian shortcomings and gives
that country a clear financial incentive to bring things up to western
standards.

That is likely to be far more effective than ostracising the company and
driving it to some obscure tax haven where it could get its share listing
without any pressure
to reform.

Anthony Hilton is finance editor of the Evening Standard

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