Alex Rankine Markets editor
“I have a location that clearly seems to be undervalued,” says Wael Sawan, chief executive of Shell. The oil boss sent shock waves through the City with comments that “all options” are on the table as the FTSE 100’s biggest company looks to close a persistent valuation gap with its US-listed peers, says Hugo Duncan for This is Money. The City has faced a “string of disappointments” of late as big names move listings or opt to float abroad. For Shell, a £180bn business, to quit London would be a “hammer blow”.
For now, Shell is focused on improving performance rather than the cumbersome process of moving the listing, says Javier Blas on Bloomberg. Commodity firms used to regard London as a natural home, but growing “apathy” towards fossil fuels among European investors means America increasingly looks a more congenial fit. If Shell does leave, pressure would grow on BP and Glencore to follow suit, decimating the ranks of Britain’s biggest dividend-payers. Often attacked for being full of “old-economy” businesses rather than tech, the City now risks losing even its dinosaurs.
The trend is not Britain’s friend
Asset manager Schroders reports that the MSCI UK index is trading at a huge 47% discount to the US equivalent, close to record levels, says Robert Armstrong in the Financial Times. Such cheap stocks are tempting, but Britain finds itself on the wrong side of several of today’s major investing trends. Markets these days attach a big premium to high growth sectors such as tech, while neglecting the dividend-paying value stocks that are London’s speciality. Secondly, large companies have been outperforming smaller ones for a while (see page 5). That doesn’t help since the average US blue-chip is much bigger than the average British one.
If stock investors don’t buy cheap Britis
