The chief executive of the London Stock Exchange has denied it is in crisis despite hundreds of billions of pounds worth of companies leaving the US.
Business executives have told the BBC that the UK is facing an “existential crisis” as large companies have left, are considering relocating or are being taken over by private investors overseas. Ta.
But Julia Hoggett said there was “no sense of panic” as Britain was “already pushing beyond its capabilities”.
A Treasury spokesperson said the UK was “already one of the best countries in the world for growing and securing investment” and was working on ways to “further improve the UK’s competitiveness”.
Jeremy Hunt, the Chancellor of the Exchequer, will hold a Treasurer’s Summit on Thursday to brainstorm ways to make the UK market more attractive to domestic and international businesses.
It is important for large companies to have their shares listed in the UK because other industries such as insurance, accounting, law and pensions are clustered around them.
Financial services account for 10% of the UK economy and generate £90bn a year in tax (half the NHS budget).
However, an increasing number of companies are delisting from the London Stock Exchange.
Cambridge-based microchip giant ARM Holdings was previously listed in London and is currently selling its shares in New York. Flutter, owner of Paddy Power, plans to move there this summer. Shares soared after British pharmaceutical company Indivior announced it was considering a move, while even British stock market giant Shell warned it could move.
Small and medium-sized businesses also told the BBC it was not worth listing on the UK market.
Biotechnology company E-therapeutics had been listed in London for 17 years until last week. President Ali Mortazavi is also looking towards the US, saying the London market is currently collapsed and closed.
“Have we reached a crisis point? Absolutely,” he said.
“Actually, I think that’s a bit of an understatement. I call it an existential risk.”
Britain’s biggest company Shell has repeatedly warned it would consider “all options” to narrow the 30% discount it is valued at compared to its U.S. rivals. Shell chief executive Wael Sawan told the BBC last year that the US market had rolled out the red carpet.
“I would like to express my sincere gratitude to the people of the New York Stock Exchange. The reception there has been exemplary.”
When asked about the possibility of a move to New York, he said, “It would be irresponsible to rule anything out.”
Charles Hall of investment bank Peel Hunt said Shell’s departure would be a big blow to London.
“It’s going to be absolutely massive, because inevitably other companies will follow suit,” he said.
“If that’s the case, BP will have to look at it, and so will all the big mining companies… As the UK market shrinks and global asset managers put less money into the UK, the stock market alone “It will definitely affect our economy,” he said.
Hall added that after Brexit, the City of London lost some of its business to the EU’s financial centers, but other European exchanges were also struggling to compete with New York.
Tech giant Apple is worth more than all 100 of London’s largest companies combined. The same goes for Google and Microsoft. On average, the valuation per profit of a company in the US market is twice his price per pound or dollar in the UK. But Hoggett said these few large U.S. companies are skewing the picture.
“If you strip them out and look at actual companies in the US that are similar in size to the UK, they’re not really outperforming,” she says.
Responding to claims that the London Stock Market is closed, insolvent, or in crisis. “That’s clearly not true in terms of the pipeline of companies that are preparing to enter the market, and in terms of the activity of companies that are entering the market,” he said.
She added: “I think we have all the fundamentals here in London and there are strong reasons for optimism.”
Mr Hoggett said finding ways to funnel more British money into British companies was key. UK investment managers invest just 4% of their assets in UK stocks. This is down from more than 40% about 30 years ago, and is well below the average for other countries.
“The vast majority of other developed countries, with strong capital markets and strong economies, direct far more domestic pension funds into their economies than the UK. So this is an important step in the reforms we are currently making. It is one of the largest areas of the world that needs to be seen. ”
Not everything is one-way. Tech startup Raspberry Pi is set to list in London soon, and Chinese fast fashion giant Shine believes London faces hurdles with New York regulators.
A Treasury spokesperson said: “The UK is already one of the best countries in the world for growing and securing investment and we are driving forward an ambitious capital market reform program to further improve the UK’s competitiveness. “There is,” he said.
Although the Prime Minister and the LSE chief insist that London is not burning, Mr Hunt clearly thinks it is important enough to take the engine to a special summit at his country estate on Thursday.
