Key facts
- London's stock market has 25% fewer listed companies than a decade ago.
- Tech and construction firms are among those delisting or going private.
- Chipmaker Arm opted to list in New York in 2023, not London.
- Flutter Entertainment plans to move its primary listing to the US.
- TUI is delisting from London in favor of Frankfurt.
- The number of IPO applicants in the UK hit a six-year low in 2023.
London's standing as a premier financial hub is facing challenges, with a notable decline in listed companies and high-profile departures to overseas markets, particularly the US. The London Stock Exchange (LSE) has seen a 25% reduction in listed firms over the past decade, a trend attributed to fewer initial public offerings (IPOs) and significant delistings across various sectors.
Despite these concerns, LSE CEO Julia Hoggett maintains an optimistic outlook, arguing that the UK market is "punching above its weight." She suggested that comparisons with the massive valuations of US tech giants like Apple and Google distort perceptions of London's performance relative to companies of similar size. Hoggett emphasized that London possesses strong fundamental advantages, including a robust ecosystem of investment banks, lawyers, and institutional investors.
However, recent events highlight the ongoing exodus. Chipmaker Arm, a British company, chose to list in New York in 2023, securing a valuation exceeding $54 billion. Similarly, Irish betting firm Flutter Entertainment plans to move its primary listing to the US, and German travel company TUI is set to delist from London for Frankfurt. The number of IPO applicants in the UK reached a six-year low in 2023, with the LSE accounting for only 2% of the $12 billion raised globally through IPOs that year.
Concerns cited for the UK's market performance include a complex listing regime, stringent governance requirements, lackluster performance of some recent market entrants, and the potential for higher valuations in the US, especially for technology firms. Additionally, a broader trend of companies going private, as noted by JP Morgan CEO Jamie Dimon, and challenges in attracting top management talent due to less competitive pay packages compared to US peers, further complicate the landscape.
UK Chancellor Jeremy Hunt is scheduled to convene a summit with finance chiefs to explore strategies for enhancing the competitiveness of UK markets. Financial services constitute 10% of the UK economy, generating £90 billion annually in tax revenue.