London fears for its future as companies defect to Wall Street

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London is used to punching well above its weight in global financial markets.

For years, the London Stock Exchange attracted an outsized share of investor capital relative to the size of the UK economy, reflecting the international nature of its listed companies.

The combined effect has weighed heavily on the FTSE 100 , which, despite a recent hot streak, has trailed the gains in benchmark exchanges in the European Union and the United States since the global financial crisis. Outside of the United States and China, London also raised the most money, through IPOs and follow-on deals, in 2021. And Britain remained the world’s leading exporter of financial services that year.

The value gap between the two markets is stark. The MSCI United Kingdom Index, which tracks 80 of the biggest UK-listed companies, now trades at a nearly 40% discount to the 625-strong US MSCI Index, according to researchers at Citi. “We are working with regulators, government and wider market participants to ensure UK capital markets provide the best possible funding environment for UK and global companies.”They are integral to Britain’s sprawling financial services sector, which contributes more than 8% to UK GDP and is the source of roughly 10% of tax revenue, according to PwC.

 

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