Boosting London's Stock Market: A Challenge for Future Chancellor

Key points:

Three recent takeover bids highlight London's shrinking stock market.
UK companies are losing capital through listings in the US, while new listings in London are scarce.
Various efforts to revitalize the market have had limited success.

Recent Takeover Bids and Their Impact

The past week has seen significant activity on the London stock market with several notable takeover bids. Each deal involved substantial premiums for shareholders, reaching up to considerable percentages.

Boosting London's Stock Market: A Challenge for Future Chancellor

Market Trends Highlighting the Issue

A report by Peel Hunt highlights an extraordinary imbalance in the market since early 2023. While there have been numerous takeovers involving a total of £165bn worth of capital, only 11 new listings were registered, adding up to just £6bn. Additionally, seven large companies moved their primary listings from London to the US, taking with them another substantial amount.

Government Efforts and Their Limitations

The government has attempted several measures to address this issue. For instance, changes in the UK listing rules have allowed founders to retain significant voting power similar to US tech companies. There have also been consultations, taskforces, and reports that aimed at understanding and addressing the problem. However, these efforts have not led to a substantial improvement in the London market’s performance.

Proposed Solutions and Future Outlook

To revitalize the London stock market, Charles Hall of Peel Hunt suggests several policy changes such as increasing UK pension fund allocations, providing tax incentives for entrepreneurs listing in London, and eliminating stamp duty on share trading. While these proposals are promising, they have not yet garnered significant attention from potential future chancellors like Andy Burnham or Shabana Mahmood.

Despite the efforts, the current state of the market is concerning. The hollowing-out of the UK stock market could hinder capital flow and investment in productive assets. Reversing this trend will require a concerted effort and innovative policies that address both immediate and long-term challenges.

Source: The Guardian

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