Peel Hunt said that continued mergers and acquisitions while companies shun London IPOs has led to a significant reduction in businesses listed on London markets. There had only been one significant London IPO this year: CAB Payments.
The number of companies making up the FTSE Small Cap Index has fallen by 21% during the past five years, while the number in the FTSE Fledgling Index is down by 28%. Peel Hunt said the numbers would be even worse if listed funds were excluded.
“In case anyone was thinking that this is due partially to some companies moving to AIM – well the AIM All-share has also contracted, with a reduction of 97 companies (12%) over the past five year,” head of research Charles Hall said.
Hall said serious work was needed to tackle the decline.
“There is a problem – There has been considerable de-equitisation of the UK market over a number of years and the pace is accelerating,” Hall said. “Reform of the listing requirements and research rules should help, but much more needs to be done to ensure that being listed is seen as an attractive option.”
He listed nine different negative consequences from the lack of listings. These are slower economic growth, reduced attractiveness of the UK as a listing destination, a reduction in sector peers, a negative impact on the professional services industry, lower corporation tax due to new ownership structures, lower attention from international investors, less ability to manage economic shocks, a focus on narrow ownership with firms owned by less people and a ‘circle of negativity’ where the previously mentioned factors only make listing in London less attractive.
Peel Hunt blamed “the steady withdrawal of funds from UK-facing portfolios”, as equity fund flows have been negative for each of the last 18 months.
“The UK used to have a thriving UK small & midcap sector, which was theenvy of most other leading markets,” Hall said. This position has been materially undermined and squandered, which is to the detriment of UK PLC and the overall attractiveness of the UK as a financial powerhouse. As markets increasingly globalise, there is a clear risk that the relevance of the UK small & midcap market continues to diminish.”
Work is already underway to help make the UK a more attractive place to list, including a simplification of listing rules and changes to how pensions will be encouraged to invest their funds. During the Spring Budget, Jeremy Hunt promised more plans would be laid out to boost the City in the Autumn.
Peel Hunt said these would help, but more work needed to be done. The research said the increase in corporation tax to 25% was “a material own goal”, and a graded version of the tax could be brought in as a politically feasible way to encourage UK listings.
It also said that a certain proportion of funds held in ISAs should be invested in UK listed assets, and that a sovereign wealth fund could be established to invest in UK businesses.
Tense diplomatic relations may not impact trade, investment ties between India, Canada: Experts
NEW DELHI: The tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, according to experts. Both India and Canada trade in complementary products and do not compete on similar products.
“Hence, the trade relationship will continue to grow and not be affected by day-to-day events,” Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.
Certain political developments have led to a pause in negotiations for a free trade agreement between the two countries.
On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India’s strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there.
India on Tuesday announced the expulsion of a Canadian diplomat hours after Canada asked an Indian official to leave that country, citing a “potential” Indian link to the killing of a Khalistani separatist leader in June.
Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.
Bilateral trade between India and Canada has grown significantly in recent years, reaching USD 8.16 billion in 2022-23.
India’s exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products.
On investments, he said that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.
Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services.
Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty relations between India and Canada are certainly a cause for concern.
“However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations,” Saraf said.
He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy.
“In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada,” Saraf said.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.
In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.
Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.
Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.
Apple supplier Foxconn aims to double India jobs and investment
Apple supplier Foxconn aims to double its workforce and investment in India by next year, a company executive said on Sunday.
Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.
V Lee, Foxconn’s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.
He did not give more details.
Foxconn already has an iPhone factory employing 40,000 people in the state of Tamil Nadu.
In August, the state of Karnataka said the firm will invest US$600 million for two projects to make casing components for iPhones and chip-making equipment.
The company’s Chairman Liu Young-way said in an earnings briefing last month that he sees a lot of potential in India, adding: “several billion dollars in investment is only a beginning”.
Taiwan election: Foxconn’s Terry Gou taps star-powered running mate
Last month, Foxconn’s billionaire founder Terry Gou said he would run for the Taiwanese presidency in next year’s election, as an independent candidate.
He said the ruling and independence-leaning Democratic Progressive Party (DPP) was unable to offer a bright future for the island and left Foxconn’s board following his decision to run.
The firm operates the world’s largest iPhone plant, in the city of Zhengzhou in Henan province.
Foxconn to double workforce, investment in India by ‘this time next year’
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