City investment bank Peel Hunt has warned that the ‘shrinking pool’ of London-listed companies risks creating a downward spiral of slowing economic growth (Daniel Leal/PA) (PA Wire)
City investment bank Peel Hunt has warned that the ‘shrinking pool’ of London-listed companies risks creating a downward spiral of slowing economic growth.
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.”
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.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
