How to reboot Britain's capital markets | FT Film

A declining stock market and restrictive pension system rules have made the UK a less attractive place for new businesses to find the funding they need. The FT looks at what is being done to improve the City's competitiveness as an international capital market

#uk #ukeconomy #cityoflondon #capitalmarkets #stockmarket #business

[billB]

It annoys the hell out of me when Jeremy hunt says he'd like to see a British Alphabet or Microsoft. I mean, we had one, it's called ARM, and it was sold off to Japan's SoftBank in 2016.

[koifren]

The fact that even the British funds stay a pole away from UK equities says a lot. In that case why would a retail investor even think about sinking their money on LSE, when instead one has open access to the American markets that obviously produce more value?

[tatianastarcic]

In light of the ongoing global economic crisis, it is crucial for everyone to prioritize investing in diverse sources of income that are not reliant on the government. This includes exploring opportunities in stocks, gold, silver, and digital currencies. Despite the challenging economic situation, it remains a favorable time to consider these investments.

[Josephtimothyq]

I came across your channel through this video—case studies are incredibly valuable, and I'm eager to see more in the future! Building wealth involves establishing routines, like consistently setting aside funds at regular intervals for smart investments.

[tonysilke]

The market's direction can swiftly change, with indexes frequently transitioning from a bear market to a bull market precisely when the news is most negative and investor sentiment reaches its lowest point.

[viviancarolgioao]

I dont even know where the stock market is headed to right now. my portfolio of around 200k is not increasing more than 5% and people are predicting a crash .

[CharlesBenjamin-q]

I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.

[joepeterson-st]

this isn’t a new thing in the uk The market trend can turn around very quickly. In fact, the indexes often switch from a bear market to a bull market when the news is at its worst and the mood of investors is at its lowest point. I read an article of people that grossed profits up to $150k during this crash, what are the best stocks to buy now or put on a watchlist?

[kb]

How could anyone have confidence in the Uk with 4 PMs in 6 years.

[askad]

So the "Britain's capital markets" is all about pension funds?
Not even thinking about attracting moneys around the world?
Seems hopeless to me.

[carpediemcotidiem]

00:02 Rebooting UK's capital markets vital for economic revitalization
02:23 Efforts are underway to improve London's capital markets despite recent subdued performance.
04:45 High executive pay justified by performance
07:13 UK capital markets facing potential challenges in raising and retaining domestic funding for startups
09:27 Efforts to reboot Britain's capital markets for UK startups and companies
11:48 Increasing investment in UK equity markets and the role of pension funds
14:05 UK pension funds lack risk-taking, affecting long-term returns.
16:19 UK's underinvestment in its own capital markets
18:28 Consolidate UK pension funds for better returns
20:22 British culture around money makes investing difficult
Crafted by Merlin AI.

[thetroyzernator]

The problem isn't unique to the UK.

In fact, I note the irony where the narrator talks about the LSE losing CRH and PaddyPower to the US when both are Irish companies that the Irish Stock Exchange lost to London.

[ReasonableHuman]

Cancel Brexit to start with.

Stock market capitalization dropped from 4.3T in 2007 to 3.5T in 2020. At some point, Paris stock market overtook LSE as the biggest in Europe which is unthinkable.

What is truly unthinkable is how NYSE tripled, during the same time frame mostly driven by tech.

UK has truly fascinating universities and lots of talented young people but for whatever reason they choose to just be servant of a private wealth.

[qeitkas]

In a world organized in blocs you need leverage. The UK on its own has no leverage. The narrative of the last century where the UK benefitted from its tax havens and tax rules but still being part of a bloc, no longer applies. Blocs will not use London anymore. They do not want to keep their financial affairs outside their own borders. Whoever thinks that the attractiveness of the City outside the EU is the same as before inside the EU, does not understand the new world. And yes Brexit is an important reason the UK is losing despite the unicorns Hunt is trying to sell here.

[bigfisher]

The biggest problem with the UK is we need more businesses. Why should I set up my business in the UK when I will have to pay 25% corp tax, ridiculously high dividend/capital gains/income tax and I will have to work my way around the highly inefficient and highly regulated market. Compare this to somewhere like Singapore, the UK is failing. As a start up owner, there is ZERO incentive to stay in the UK.

[averagestudios]

If I were given a check for £1000 I’d take a punt on US equities

Edit: British; just a spelling error

[wendywolfman]

Wasn’t there a U.K. cloud company based in Manchester that would have competed with Amazon cloud services but the government chose to use Amazon services and the Manchester company ended up going under.

[eugen-prlg]

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[lesdickson]

This is a bit of a long comment but there’s some nuance which I think is important. Our (London) stock market is what is widely perceived to be a dinosaur equity market that’s overly reliant on old economy sectors such as oil and banks which leads to my next point.

On lack of exciting companies listing - we're risk-averse as a country, and the doesn't bode well for startups specialising in things like AI (the new hot topic) and quantum computing, whose large capital expenditures require years of patience. A key accelerant in the move of some listings to the US is a lack of liquidity in the UK, understandably so, if UK plc's can fetch higher valuations and a larger investor base whilst US listing rules aren’t extremely tight, why wouldn't they move? An example of this was Arm Holdings choosing Nasdaq over the LSE in 2023, this isn’t to say that breaking into the US will be easy, even though Arm have been successful in doing so.

I remember reading a report on Bloomberg talking about how the UK tech struggle to keep up with Bay Area/Silicon Valley tech in terms of funding. Funding for startups (companies valued at no more than $15m — 91% funded, $4.1bn for UK vs $4.5bn), but the moment UK companies reach scaleup status (valuations of $15m-100m), we raise $7.1bn vs $13.9bn for Bay Area which is 51%, and it gets even harder when tech companies in the UK reach breakout status (>$100m valuation) as we raise $7.8bn vs $35.2bn in the Bay Area which is 22% of funds raised in comparison to SV.

Also, in the early 2000s, the UK government introduced new rules forcing retirement fund managers to be more open about their investments and about how they planned to meet future pension obligations. One result was a shift out of riskier equities — the pension industry’s preferred investment until that point — and into safer government bonds. The trend was reinforced over the following decade as millions of workers holding so-called defined-benefit pension plans retired. Pension managers doubled down on government debt at the expense of shares so they could better match their long-term liabilities to those retirees. What’s more, what little equity allocation the funds retained was put increasingly into stocks in other markets as they tried to diversify their holdings. UK pension funds held 1.6% of UK-listed stocks in 2022, down from about 32% in 1992, according to data from the Office for National Statistics.

Edit: thanks to depressed valuations, London’s allure as a center for IPO activity has been diluted by a glut of alternative funding from private equity. That’s been compounded by some woeful stock performances in the wake of high-profile listings, including Deliveroo Plc, Dr Martens Plc and Ithaca Energy Plc. Meanwhile, headlines around companies leaving London for other exchanges have hurt the City’s image as a place to do IPOs. I've heard Shein want to IPO in London for around $64bn, but imo I don't think it'll revive London's capital markets the way people think it would, the company has controversial ethical + sustainability practices, as well as possible IP theft and moreover, they chose London as they couldn't file for an IPO because of hurdles to the listing in the US which is tied to the earlier point about their shady practices. We're basically 2nd choice if firms applications for US based IPO's (NYSE or Nasdaq) get rejected.

[TouringTony]

I live in the UK and recently inherited some money. A broker came to talk to me and it was obvious that the UK stock market isn't worth investing in so I put my money to work internationally.

The Internet has made this easy and efficient whilst keeping me tax compliant.

The next government has their work cut out if they want to change this