Good afternoon. This is your midday market update from City AM.
Dame Julia Hoggett spent the latter stages of last week lamenting the dour mood music that has long plagued our capital markets ecosystem, and calling on the government to make it “more attractive” to invest in UK equities.
"We need to stop throwing shade at ourselves as a nation... it's a national habit," the London Stock Exchange boss told the BBC in an interview, adding: “If we want Britain to back Britain, which is what I hear the Chancellor and the Prime Minister saying, then let's make sure that we're creating structural incentives to do so. We need to take the handbrake off.”
Well, the bad news for Dame Julia is that, just three working days on from those remarks, Peel Hunt has published an excoriating note laying bare the scale of the challenge facing both the LSE and government ministers.
According to the investment bank’s head of research Charles Hall, there have been 166 successful bids for London-listed companies worth more than £100m since 2023. By comparison, just 11 companies of that scale have joined via an IPO.
Firms are leaving London at an “unprecedented scale”, Hall wrote. “To say that the UK has a problem retaining its companies and listing new ones would be a massive understatement.”
The arguments over why London’s bourse has struggled are well rehearsed. UK equities have, for years, failed to attract the same valuations or traded at the same volume as their US counterparts. There are complicated and competing reasons for this - but the upshot of it is twofold.
Fixing the stockholes
First, founders of - and investors in - IPO-ready companies don’t fancy listing here very much: why float a fintech here for £15bn, when it could fetch £20bn in the US, where it would also be a more liquid stock and where you, as a founder, would retain greater control over its governance? And second, foreign investors and competitors - which know a bargain when they see one - are plucking LSE constituents off at a record rate.
The problem, Hall wrote, is getting worse. As the chart below shows, there are currently 42 live bids on UK-listed companies, with a total market cap of £74bn. That compares to 40 in the whole of 2025, at a value of just £35bn.
But in the spirit of Dame Julia, rather than fixating on the scale and nature of the problems - how might we fix this sorry state of affairs? Alongside the obligatory calls to scrap stamp duty on shares and boost pension funds’ domestic exposure, Hall suggests a number of interesting - and unorthodox - solutions.
First, he suggests a complete capital gains tax holiday for the founders of British companies that choose to list on their home stock market. This year, by Peel Hunt’s reckoning, more UK tech companies will list abroad than in Britain, and the economic benefit of a tax carve-out to keep them here would be “substantial”.
There is also an interesting proposal to introduce a “minimum UK weighting” to your and my stocks and shares Isa. Want to continue benefiting from your nest eggs being free from capital gains and dividend tax? Well, Hall writes, perhaps the government asks you to commit a fifth of your portfolio in UK blue-chips rather than piling it all into the Magnificent 7 or a triple-leveraged Kospi tracker fund.
And, finally, Hall submits, if Hoggett’s LSE is so intent on being boosterish, why doesn’t it start practising what it preaches? At the New York Stock Exchange, stroking the egos of IPO contenders has become a full-time occupation for some officials. One British scale-up founder was telling me the other day that, after it hit a commercial milestone, the NYSE had already congratulated him with a message sent to every trading screen in the country. It also booked him advert on Times Square. By that time, the London Stock Exchange hadn’t even met him properly to discuss his potential debut.
Tax incentives, pension fund overhauls are all crucial to stop the bleed of London’s capital market woes. But perhaps the answer also lies in our stock exchange buying out a weekly slot on… Piccadilly Circus?
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