On recent evidence, the UK market is failing to fulfil even that basic function
Alex Rankine Markets editor
Stockmarkets exist to price assets and efficiently allocate capital, says Nils Pratley in The Guardian. On recent evidence, the UK market is failing to fulfil even that basic function. Bidding wars for logistics business Wincanton and electrical retailer Currys have brought foreign takeover offers at massive premiums to their stock prices.
For Wincanton, bidding began at a 52% premium to the pre-offer stock price and then ballooned to 104%. That shows how deeply the London exchange undervalues companies, especially the mid and small caps. In a market that is “liquid and full of active buyers and sellers”, such gigantic takeover premiums would be exceptionally rare. Is it any wonder that listings are fleeing for New York?
A series of woeful disasters
The MSCI UK share index trades at a deep 46% discount to US peers, says Bloomberg. The total market capitalisation of UK-listed stocks has shrunk from $4.3trn in 2007 to about $3trn now (the US market is worth $53trn). Where London once vied with New York for global dominance, today it struggles against regional rivals and was overtaken by Paris as Europe’s biggest equity market in 2022. The withdrawal of UK pension funds from British equities has been a long-term drag on performance. Brexit – which made Amsterdam Europe’s default listings venue – and a series of “woeful” listings disasters such as Deliveroo and Dr Martens, have compounded the injury.
Shares in Cambridge-based chip designer Arm have more than doubled since it floated in New York last year, vindicating its decision to shun London, says Ben Marlow in The Telegraph. Arm’s American success will only encourage others to leave. The FTSE exodus is not being replenished – listings failed to top $1bn last year, “the first time the Lon
