The Great Exchange: LSE- TMX merger

The merger of 'equals' gave birth to the largest exchange listing for the mining company. The new merger that took place between London Stock Exchange (LSE) and Toronto Stock Exchange (TMX Group) now has total combined listings of 6,700 with an aggregate market capitalisation of approximately $3.7 trillion.

This merger of equals was one recommended by the boards of LSE and TMX, with LSE shareholders owning 55% and TMX owning 45% of the capital. Not long after the announcement of LSE-TMX merger the share prices for LSE shot up by approximately 8% (a rise by 72.5p) after which began to have a slight drop hours after the merger. Due to the fluctuations on the rise and fall of share prices, this goes to show how inefficient the stock market can be, it seems that there is no particular trend to justify or even predict movements in shares as it all depends on the time the announcements are made in relation to change/ news  regarding a firm. The prices of shares are not necessarily predermined by a particular factor as proved by studies in the early 1960s and 70s. All known information (historic) are reflected in the share price, and how quickly the news gets out, of how bad or how good a firm is performing is something that will surely determine the returns to be made to shareholders.

To be honest shareholders are one of the biggest risk takers as they are investing into uncertainty in the world of financial returns.  The truth i believe is that the main price-setters in terms of shares can be selfish depending on their mood and situation. As for the shareholders, things might not necessarily work out according to the promises of the firms they have invested in, so their highest protector is the news; now depending on how quick they follow the news on their firms this will determine whether or not they are making a profit/ loss and hence determine whether to buy/sell as there are no such things as 'perfect timing' it is more a matter of 'luck' considering abnormal returns does not exist unless there is a 'leak' to warn particular investors before the news is out publically.

Going back to the merger of LSE-TMX group, this merger looks promising and will benefit companies and centres like Toronto, Milan and London as well as its shareholders. This is because products will be crossed linked allowing considerable growth opportunities and a 'deep pool' allowing more investors and also European issuers having a 'gateway' into the North American financial markets. This is enough to keep the share prices up for awhile, giving the shareholders and other investors a thing or two to smile about but with talks around the corner regarding  a possible merger between another two 'giants' in the exchange markets the NYSE Euronext and Deutsche Boerse (although both firms refused to comment) just before discussions about the dealings were announced (according to the BBC) the share in LSE suddenly climbed by 3.1%, again proving just how much new information can quickly and rationally affect share prices. So really when it comes to share prices and wanting abnormal returns, even i will advise that its not worth wasting time and studying past events of firms and their performances, it is more a matter of 'luck' and striking it rich by 'chance' unless one has access to information that has not yet been published.