Your £100 on the FTSE would now be worth £118 or on the FTSE250 (smaller companies) just £114.
Not great after eight years is it? That £100 in the French CAC40 would now be worth £198; in the Japanese Nikkei 225, it would be worth £235 and in the S&P500 index in the US, it would have grown to a staggering £250. Even £100 invested in Italy’s FTSE MIB would be worth £189.
He describes the LSE as a "unique national asset" built over decades even centuries, reflecting Britain's imperial past but now all that is going into reverse:
"Already the dismal valuations in London have contributed to a collapse in the number of listed companies, down nearly 50 per cent since 1997 and six per cent in 2023 alone. New listings have almost entirely dried up. Whereas £12 billion worth of shares were issued via initial public offerings in 2011, that had fallen to just £338 million last year and just £18.5 million this year.
"That compares to more than £4 billion of new listings on European bourses this year. Some IPO candidates have instead turned to private equity. Others, such as ARM Holdings, the semiconductor giant, chose to list in New York. Most worryingly, a growing number of companies are giving up their London listings in search of better valuations in New York, most recently CRH Holdings, Ferguson and Flutter."
Bear in mind that many UK pension funds get their income from FTSE companies.
What's behind the decline? Well, it seems pretty clear to Nixon. It's Brexit, which he argues has created a lot of "the political chaos and uncertainty that has arisen" since 2016. Many if not most institutional investors now look at asset allocation on a global basis, and with the UK comprising less than 4% of global market capitalisation, many prefer to steer clear of a market that comes with so much political and currency risk.
As one fund manager told him, there is little that you can buy in London that you can’t buy elsewhere. Whether it's exposure to oil, luxury goods, or engineering you are after, other stock markets offer it too.
Since the start of January, there has been a surge in stock market highs globally driven by what the FT calls a 'risk reset' showing a "growing confidence in the global recovery."
But whereas the S&P500 index of US shares is up 9.8%, the Dax 40 and CAC40 indices of German and French shares are up 9.0% and 7.6% respectively, and the Nikkei 225 index of Japanese shares is up a remarkable 18.2% in Britain the FTSE 100 is up just 2.4%.
And Nixon isn't alone. One of Britain’s top life science leaders, Sir John Bell, has warned in The Telegraph that the LSE is "going down the gurgler" over an impending exodus of drug makers from London. He said The City is a “bad place to raise money”.
It is very worrying and not a good sign for the future.
Also in The Telegraph I see Matthew Lynn, who can usually be found vying with Daniel Hannan for the top spot in the 'being totally wrong' stakes, tells us that: Brexit has saved Britain from Brussels’ worst blunder yet.
This is about the EU's €723bn Covid Recovery scheme designed to help the continent’s economy recover from the pandemic. Lynn has read about fraud in Italy amounting to €600 million and a further €2.5 billion is being investigated in Greece. Nothing has been proven yet and even he admits it's "early days."
So, he thinks we should be grateful not to be in a programme designed to use cheap money to help recover from the pandemic because of fraud which is so far unproven and even if it's true involves a little over 0.4% of the total. In other words, 99.6% is fine. The whole thing is even more galling given this government's appalling record in controlling fraud in its own Covid support and PPE funding where millions of pounds went into the pockets of Tory donors.
His article was re-tweeted with gusto by fellow Brexiteer Catherine McBride:
Even Remainers cannot deny this benefit of Brexit https://t.co/aVUmhLNf7A
— Catherine McBride (@CeeMacBee) April 13, 2024
This is the answer to Mr Nixon's question about why stories about the slow death of the London Stock Exchange don't fill the front pages of the media. They are largely Brexiteer owned and like the three wise monkeys can't see, hear or speak any evil about Brexit. It is to them like the Post Office's Horizon system, so incapable of being wrong that it is the rock-solid pivot around which everything else must move or be bent.
Instead, people like Lynn and McBride nitpick about largely irrelevant stuff that they can use to build a case against the EU. This is necessary because Brexit has delivered precisely zero in the way of benefits and spirits must be kept up as the ship sinks..
Finally, Trump appears in court in New York tomorrow, the first ever president of the USA to face a criminal trial. The first of many. It should be good.
