A number of “simple” reforms can be put in place to turn around the performance of the ailing UK stockmarket, according to Edison Group’s Fraser Thorne, who said “nothing about the decline of the LSE is inevitable”.
The business founder and chief executive’s comments come following reports that shared office provider IWG may relist in the US, which would add to a growing list of firms ousting themselves from the London Stock Exchange. Building materials supplier CRH is set to move its listing to the NYSE next month, while Oxford Cannabinoid Technologies announced yesterday that it will also delist from the LSE due to “constrained… ability to sustain a sensible valuation”.
In February this year, 98% of Tui’s shareholders voted in favour of the travel giant moving its listing to Germany. One month previously, betting firm Flutter announced it would switch its primary listing from London to New York, with the shareholder vote due to take place later this month.
According to Peel Hunt research, some 30 firms with market caps of more than £100m delisted or planned to delist from the LSE last year alone. The most significant move was chip designer Arm, which relisted on the Nasdaq in September and marked the biggest US listing of 2023.
“Reports of IWG’s possible move to the NYSE have set off yet another round of fretting over the future of the LSE,” Thorne said. “This is misplaced. The problems facing the LSE, while real, are all eminently solvable. The tools are all in our hands.”
The CEO said some of the reforms which could change the fortunes of the LSE are “very simple”, one of which being the abolition of the 0.5% stamp duty on share transactions. According to Thorne, this only nets the Exchequer £3bn each year, which he argued is “a miniscule revenue stream, purchased at a very dear price for the LSE”.
“Other changes will take more time,” he reasoned. “Work is already underway to help the LSE take advantage of the meteoric rise of retail investing with the British Isa; and with the LSE’s new partnership with PrimaryBid, which makes it easier for retail investors to access IPOs and secondary offerings.
“A new on-demand platform for investment research, a kind of ‘Netflix’, would complement the changes made to investment research regulation in last year’s Rachel Kent Review: increasing liquidity and improving valuations and market discovery.”
More holistically, Thorne said a change of culture in London is required in order to bolster valuations relative to the US, with companies “not being aggressive enough” with their marketing and in “telling the public about the investment opportunities available”.
“London must ape the NYSE in this way, and learn to blow its own trumpet.”
He concluded: “Nothing about the decline of the LSE is inevitable. After all, the Exchange had a record year for IPOs just three years ago. The City is still a premier global financial centre – we now need fewer jeremiads about its future, and more frank discussions about what we can do to refresh it.”
