A changing of the guard at the Luxembourg Stock Exchange, known as LuxSE, and strong results increases across the board were the themes at Wednesday’s Luxembourg Stock Exchange annual press conference.
Outgoing Chairman Frank Wagener spoke of the stock exchanges’ accomplishments during his 11-year stint after Alain Kinsch was elected to the position at a morning board of directors meeting. The exchange’s management discussed how the small stock exchange manages to avoid being absorbed by larger players when it has when it has partnerships with giant European stock exchange institutions like Euronext and Deutsche Börse.
Wagener linked the exchange’s independence to its success: “I think it stays independent because its shareholders want it to stay independent. And because the management and the results of the company show that this a success story,” he said. “If we were more in trouble, I think maybe there could be a change in strategy. So it’s up to us to be successful, meaning that by being successful, we will stay independent.”
“It has really been a success story which is very specific for a small market like Luxembourg to have its own independent stock market,” noted incoming chairman Alain Kinsch.
Very specific position
“We are in a very specific position, making us unique,” said CEO Julie Becker, referring to the fact that the LuxSE doesn’t trade stocks, but only lists bonds. “And I think with a very strong expertise and knowledge, which allows us to remain independent.”
Becker presented the figures for the year, with the headline figure being a 20.5% year on year increase in consolidated net profit to 13.5 million euro, on consolidated revenues of 55.4 million euros. Both of these figures applied to both the Luxembourg Stock Exchange and Fundsquare. “The financial results for the financial year ending in 2021 were quite exceptional, very strong performance financial performance in 2021,” she said.
Strategy confirmed
“All of this confirms our strategy,” said Wagener during the press conference. “It’s a successful strategy that we’ve been pursuing for quite a few years, since 1928, to be precise, to be innovative and creative, to be flexible and to be agile and above all to be independent. But to be independent, we need, facing the ship that surrounds us, in London, in Frankfurt, in different capitals of the Euronext type. In Europe, you have to be innovative, flexible and agile. You have to be among the first to react on niches, join forces with confirmed players, join forces with start-ups.”
Becker recounted how the LuxSE had experienced strong activity during 2021, with 12,689 newly listed securities during last year, bringing the total to 37,839 at year’s end. These instruments accounted for the raising of 1.3 trillion euros during the year, down 14 percent from the year previous, she reported.
“This record level of the number of securities being listed on our exchange,” said Becker, “make us a global player and even a leader in international capital markets, in listing international debt securities.”
The press conference included a segment on LuxSE’s actions in relation to the Russia/Ukraine conflict. “The Luxembourg Stock Exchange had to take action, of course, based on those sanctions, immediate action by the way, and we decided to suspend six securities that were issued by Russian issuers directly, but also 648 ruble denominated securities issued by 29 entities.” She explained that 128 of these securities saw the sanctions lifted through an agreement with the CSSF and the Luxembourg minister of finance.
Green exchange record
It was also a record year for LGX, LuxSE’s Green Exchange, she reported, with 560 new sustainable bonds, a 46 percent year-on-year increase, worth 246 billion euros, up 31 percent. The LGX now has 1,178 fund share classes after a revamp of the fund section. Some 222 issuers from 47 countries have listed 2,613 securities, including 1,234 sustainable bonds amounting to 640bn being raised for sustainable development projects.
Becker mentioned the LuxSE’s decision to expand its green platform to innovative financial instruments and “go beyond green, social and sustainability bonds” by displaying bonds issued by “climate-aligned issuers”.
“The objective is really to increase the scope of investment opportunities for sustainable investors and go beyond green, social and sustainability or sustainability-linked bonds,” Becker explained. “Because as you know, we lack supply of sustainable investment products in Europe.”
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