When a stock market is shrinking, delistings are demoralising. On Wednesday, Just Eat Takeaway said it would ditch its secondary London listing. It’s a sensible move for the lossmaking company which needs to cut costs. But it again highlights the challenges facing the London market after a stream of departures. Still, the gloom about the London market looks overdone. The IPO pipeline is improving, even though this year 14 IPOs have so far raised just £750mn.
If 79 megacap stocks that account for over half of US turnover are excluded, the average large cap daily value traded is only 1.3 times those in London and other European markets, according to Euronext. More troubling is the valuation gap between the UK and US markets which is at a record high. The FTSE 100 forward price/earnings ratio of 12 times is roughly half that of the S&P 500. Much of this gap disappears if highly valued US tech giants are excluded.