London Stock Exchange stock hits ATH; trails Nasdaq and NYSE

The London Stock Exchange Group (LSEG) share price is doing well this year as it surged to a record high. It has soared by over 12% this year, beating the FTSE 100 and FTSE 250 indices.

Nonetheless, despite the strong performance, it still lags behind the performance of the NASDAQ and Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), whose shares have jumped by almost 30% this year.

The same trend has happened for a long time as they have risen by 130%, 83.50%, and 58% in the last five years.

LSE and the IPO drought

The LSEG share price has risen in the last eight straight weeks even as the company has continued facing a difficult period and a prolonged Initial Public Offering (IPO) drought. It has also soared by over 104% from its lowest point in 2020.

The biggest challenge the company has faced is that London is going through a drought while some of the biggest companies in the market are considering jumping ship to the United States.

The LSE has had just one major IPO this year; Raspberry Pi, a company that manufactures small computers.

LSE hopes that it will attract Shein, a Chinese company that operates one of the biggest fast fashion brands globally. That would be a big IPO since the firm is valued at over $90 billion. If it went ahead with the IPO, it would be the 9th biggest company at the LSE.

The UK government is also working to convince Revolut, a leading neobank, to list in the UK. Also, that would be a big deal since it has a valuation of over $45 billion, making it bigger than Lloyds Bank and Barclays.

Several large companies have considered leaving the LSE. Shell, the oil and gas company, considered moving from London because the company always trades at a discount to its American peers there.

BHP Group, Flutter Entertainment, Tui, and CRH Group have all changed their primary listings from the London Stock Exchange.

LSE is a much bigger company

Therefore, the LSE share price is thriving for two main reasons. First, companies listed in the exchange are doing well this year, with the FTSE 100 and FTSE 250 indices sitting at their all-time highs.

Second, the London Stock Exchange Group is a much bigger company than its name suggests. In addition to running the LSE, it is also one of the biggest data companies in the financial services industry.

It boosted this data business by acquiring Refinitiv from Reuters. Refinitiv is a financial software that competes with the likes of Bloomberg and FactSet. It is an expensive suite that provides data across all asset classes and is used by most banks, hedge funds, and private equity companies.

The LSEG also provides other solutions like benchmarks and indices through its FTSE Russell business, analytics solutions, and forex trading solutions.

Its indices is a high-margin business since the company creates them and then licenses them to other companies like Blackrock and Invesco. Some of its top indices are the FTSE UK Index, Russell 2000, and FTSE Global Equity High Income Index.

The most recent results showed that its revenue rose by 7.1% in the first half of the year to £4.1 billion. This growth happened across all its business lines. Data analytics grew by 4.3% and was the biggest part of the business.

FTSE Russell, Risk Intelligence, Capital Markets, and post trade revenue rose by 11.5%, 11.5%, and 17.4%, respectively. This growth is expected to continue in the foreseeable future as the market recovers and as companies start spending.

Most notably, LSE is growing profitably. Its profit rose from £888 million in the first half of 2023 to over £931 million.

Additionally, the London Stock Exchange is returning substantial sums of money to shareholders. It spent £424 million in dividends in the first half and then repurchased stock worth £1 billion.

LSE share price analysis

Turning to the weekly chart, we see that the London Stock Exchange share price has been in a strong bull run this year. This rally accelerated after the stock jumped above the key resistance point at 9,518p, its highest point in February 2021.

Most recently, the stock jumped above the upper side of the ascending channel shown in green. Moving above that level was a sign that bulls are now in control.

The LSE stock price has remained above all moving averages while the Average Directional Index (ADX) has risen to 14, meaning that the bull run is gaining momentum.

A drop is still possible as investors start taking profits. If this happens, it will likely drop and retest the key support at 9,518p. In the long term, the stock will likely continue rising as its performance continues improving.

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