Why Are London Stock Exchange Prices Important?

Hopefully it goes without saying that prices on the LSE are quoted in pence. A typical price might be, for example, 327 pence. This would mean that each share is currently valued at GBP3.27 or three pounds and twenty seven pence.

Unlike the US markets, it is very rare for British companies to trade in the hundreds of pounds per share. For example, as I look at my stock ticker now, Amazon is trading at $316.48 and Apple at $112.82 per unit. Even the largest companies in the UK - of which there are some incredibly big firms, would not trade at such numbers.

Beyond The UK

As one of the oldest and largest exchanges in the world, the LSE has a very significant role to play in the global economy. It is not, admittedly, as important as Wall Street, but major moves in London have an impact elsewhere.

There are two areas in which this is especially true, oil and financial services. While The City is home to virtually every investment bank, there are many other areas in which London is important, such as in foreign exchange and the eurobond market.

The influence of the UK financial services sector was shown to the fore during the financial crisis of 2008/9 when the British banking sector was put under major pressure and forced to bailout banks. The close relationship to Wall Street meant that as the big American firms began to suffer, the impact was felt simultaneously in London.

Additionally, Britain's history as an empire means that there are many holdings in the oil sector around the world that are still quoted through the huge companies like BP. Some of these types of descriptions are covered in our pages relating to beginners (information here), our description of a stock market (information here and information here).

"Special" Relationships

The UK economy sits in the middle. On the one hand, it is a part of the European Union and most of Britain's main trading partners are EU member states and eurozone countries.

The UK joined the EU mainly for trade reasons, but over the years there has been strong internal dissent and discussion about whether or not it should remain a part of the Union. Much of this discussion comes from the mainstream print media, where there are a number of daily newspapers with anti-EU views and a prominent section of the political class. The Conservative Party has had internal arguments about Europe for years, which now simply seem to be a part of the party's identity.

However, the British economy has traditionally been more closely linked to the business cycle of the United States than Europe. This means that it has an American economic cycle while being very closely linked to Europe's movements as well.

As many people will remember, former UK Prime Minister Tony Blair was very proud of the 'special relationship' that the UK shared with the United States. Not only was he able to work closely with Democratic President Bill Clinton, but also with Republican President George W. Bush.

The strength of these ties and the massive amounts of trade that occur between the UK and USA mean that many leading politicians and businessmen are keen to preserve the relationship at all costs.

As might be imagined, as the global economy has become closer and ever more large companies become global, London is a hub that many powerful interests wish to preserve. There are many people that now believe that property in London has become something of a reserve currency for the super-rich (information here). While situations like that exist it is very easy to imagine that the status quo will remain and the United Kingdom, it's economy and stock market will remain a vital global hub.

To visit other areas of this site that relate to the LSE, please click on the relevant link:

London Stock Exchange Information

London Stock Exchange History

London Stock Exchange Alternative Investment Market (AIM)