The exodus of UK-listed companies from London's stock market is accelerating at an alarming rate, with a new report from City broker Peel Hunt revealing a stark imbalance between company delistings and new initial public offerings (IPOs). The data suggests that for every four companies that opt to leave the London Stock Exchange, only one new business chooses to list, painting a grim picture of the market's shrinking size.
The report highlights that foreign predators are increasingly acquiring UK-listed companies, with over 60% of these deals involving overseas bidders. This trend is further exacerbated by a lack of new businesses choosing London as their primary listing venue, with just 12 new IPOs in 2022 compared to an average of 80 per year during the pre-financial crisis period.
The implications for the UK's capital markets are significant, with potential consequences for investment opportunities, economic competitiveness, and pension fund returns. A shrinking stock market can reduce the pool of investment options available to large institutional investors like pension funds, potentially impacting returns for millions of UK pension holders.
According to Peel Hunt's analysis, if current trends continue, the number of listed companies on the London Stock Exchange could fall by up to 30% in the next two years. Addressing this 'depopulation' will likely require a coordinated effort from policymakers and market participants, involving regulatory reforms and initiatives to foster growth among UK companies.
The report's findings serve as a wake-up call for the UK government and regulators to address the long-term consequences of this trend for the country's economy. With the UK's economic competitiveness increasingly dependent on its capital markets, the need for action has never been more pressing.