LUSAKA Stock Exchange (LuSE) and other small markets should continue with efforts to integrate into the global market despite being ‘caught up’ in the recent collapse in global financial system, a senior official at London Stock Exchange has said.

And London Stock Exchange (LSE) said there is less possibility for small markets like LuSE to attract well-established Western companies to list on them.

At the height of the worst global economic recession in the last 18 months triggered by the collapse in the world financial order, well integrated and developed financial systems in Western countries were the hardest hit compared to their peers in developing and emerging economies.

With the worst economic crisis since the great depression of 1930s ripping apart the global financial system, some analysts contended that less integration of the global stock markets could help to ‘insulate’ some capital markets from future calamities.

But LSE manager for International and Business Development Richard Webster-Smith told selected African journalists in London at Paternoster square that regulatory practices and corporate governance issues, and not disintegration, were some of the lessons drawn from the recent financial disaster.

Webster-Smith, however, admitted that if the markets were very integrated, capital flights in and out was inevitable adding that such movements brought about volatility, especially in low liquidity markets.

“Some of regulatory standard in some markets wasn’t up to standards…although the degree of integration does play a factor, I don’t think that is a lesson we can draw a factor,” said Webster-Smith.

“What we think is that the benefits of integration can bring to markets like Zambia is for it to raise the bar of corporate governance to bring in more transparency and other international best practices. I don’t think putting up a wall would be one of the lessons.”

And Webster-Smith said there was less possibility for small markets like LuSE to attract well-established Western companies to list on the local bourse.

Webster-Smith said low liquidity levels in small markets like LuSe made it economically imprudent for huge multinational companies to list on the local African capital markets like Zambia.

He said the way to go especially for countries like Zambia whose economic backbone was in the hands of foreign multinational companies, all which were foreign-listed was to ‘advocate’ for dual listing.

“If you have investors trading in London and African countries, we think that could help liquidity and trading in your own markets. It would be beneficial,” he said. “Realistically, what we have seen in the last ten years is companies rationalising where they listed limiting to one or two places. Why incur the high cost to list elsewhere when you don’t see liquidity.”

Webster-Smith said the other reason a company would want to list in a market with less liquidity was to show commitment to certain market.

Webster-Smith stressed that most companies prefer to list on LSE as it provided access to the global markets.

Most key business in the privately-owned Zambia’s vast mining sectors like Vedanta Resources Plc are listed on foreign bourses like LSE and Toronto while most Zambian individual and institutional investors are left to share spoils in mostly locally-owned small companies listed at LuSE.