London can become the world's premier stock market for growth companies
London can become the world's premier stock market for growth companies
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PRESIDENT Trump promises a new golden age but US stock markets have already been living through one. Powered by the Magnificent Seven, the US accounts for two-thirds of the MSCI All-Country World Index and investors continue to throw money at it like the tech entrepreneurs who queue to pay obeisance at the White House.
The trend must reverse sometime. Certainly the deep discounts on quality stocks available in the UK, which can project itself as a common sense country at this time of great geopolitical upheaval, are bound to be catching the eye of contrarian investors. But Wall Street’s propensity to suck up multinationals with the promise of sweetening their share price means anyone else in the capital markets game has a fight on their hands.
London is alive to the challenge and has plenty going for it, with recent listing reforms still to bed down and more to come around prospectuses and pensions. Efforts to further internationalise are clear. Chinese fast fashion giant Shein would make an interesting addition to the FTSE 100, where constituents may soon not be required to trade their stock in sterling.
And yet in the week the Chancellor makes a big speech to underline her pro-growth credentials, I can’t help thinking we are missing the main chance. Competing for corporate goliaths is fine, but Nvidia won’t relist here anytime soon. Much better to focus on an area where the US capital markets simply can’t compete: small companies.
Not all acorns grow into mighty oaks, but all big companies start small. For any venture worth less than several billion dollars, the US markets rule themselves out because of prohibitive underwriting fees, legal and insurance costs. It’s valid to fret about UK start-ups looking abroad for growth capital. But how many more could be drawn to these shores if the City of London mobilised and marketed itself as the world’s growth exchange?.
