July 20, 2024

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Britain’s market reboot focuses on start-ups and pensions

2 min read

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The City is at quite a delicate juncture.

The London stock market has been suffering from an outflow of investment.

Tech start-ups in the UK are being tempted to list on Nasdaq.

That means that the returns that those companies make will go to overseas investors.

At the heart of the problem is the UK’s flawed pension system.

You’re only going to revitalise the UK if we can get pension funds investing again into risk areas of the economy.

The London Stock Exchange is shrinking. That much is clear. Since 1997 the number of companies listed on public exchanges has fallen by almost a half, and the number of new companies coming to market is down by about a third. That means that the UK accounts for a shrinking part of the global pot of global equities.

When I started working in the City nearly a decade ago, we were talking about the FTSE, would it reach 7,000? And here we are nine years later and it’s just breasted 8,000 for the first time. That level of growth is just nowhere near what you’ve seen in the US in that time.

A big problem is that the UK markets are dominated by the so-called old economy sectors, things like mining and oil.

These are not the sorts of investments that get a lot of asset managers out of bed in the morning excited about putting money to work. The new economy, tech, artificial intelligence, all of that stuff, is just not here.

You’ve seen companies such as Flutter, which owns Paddy Power and Betfair. You’ve seen CRH, big FTSE 100 groups, move their primary listing out of the UK to the US.

Even the really big oil companies like Shell, even the fact that it had crossed their mind to maybe leave Europe, maybe leave the UK, this was the wake-up call. I think that the City really needed to start taking this seriously.

London, a typical day on the stock exchange, with members engaged in the busy round of buying and placing shares.

In an ordinary market, what you’d normally…

2024-06-19 00:02:31

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