Use a sledgehammer to crack a nut; Break a butterfly upon the wheel; Don’t burn your house down to smoke out a rat (a new personal favourite); The plot of 1997’s Mousehunt.
What I’m trying to get at (and, please, answers on a postcard) is the sense of attempting to change so much in an effort to resolve a problem that one may accidentally create more problems along the way – what’s more, perhaps all efforts are futile.
Friday Briefing: Why debate when you can just say no?
It’s this latter part that I’m struggling to pin down – perhaps there simply isn’t an answer beyond just… waiting?
I’m talking about the nation’s long-running obsession with our ‘unattractive’ listings regime.
Earlier this week, the Investment Association confirmed it was consulting with members on the attractiveness of the UK as a place for companies to list, using the underlying principle that “there is clear alignment between pay and performance”.
As such, that sounds like the eventual consultation paper will encourage higher pay for executives in the UK.
Two points here: Not convinced a consultation should be carried out with a pre-determined underlying principle, and also, does it?
I agree that to attract the best talent, compensation is an important factor, however, “a clear alignment between pay and performance” sets a logical precedent that doesn’t hold true ad infinitum, as evidenced in a Delaware court this week, where Elon Musk’s $56bn pay package was ruled improper following a suit launched by Tesla investors themselves.
Friday Briefing: What it really cost you to double your money last year
This is just the latest in a long line of attempts to reassert the attractiveness of the UK as a place to list your company.
At the end of last year, the FCA unveiled its proposals to reform the UK listings regime, aiming to put “sufficient information in the hands of investors”, a resolution to an issue I hadn’t heard levied against the UK prior to the solution being proposed.
In September 2023, the FCA’s executive director of markets and international, Sarah Pritchard, insisted the then-unreleased changes would “attract a wider range of companies, encourage competition and improve choice for investors”.
Way back in 2021, the Lord Hill Review was one of the first major documents to suggest the reason the UK markets were falling behind their global counterparts was precisely due to archaic listings rules, although the review also recommended liberalising guidance so we could attract more SPACs to our bourses, which sounds about as relevant today as easing access to NFTs.
We can’t even agree whether the UK is an unattractive place to do business: at the top of the year, a KPMG survey found London is the second most attractive place to list in the world, behind only New York, with Amsterdam so far behind as to not be comparable.
Friday Briefing: I’m not sure this is what Sunak and Hunt had in mind
But it is clear the FTSE is a different beast to, say, ten years ago.
Schroders group CEO Peter Harrison noted that just 14 companies opting to delist last year alone cost the UK more than £100bn in market cap.
While it doesn’t look great at first glance, that £100bn hasn’t necessarily left the country and our economy – it’s just not on the FTSE.
Harrison also noted that de-listing was a global trend, with the US and Europe suffering largely the same fate, but without the same “self-flagellation”.
However, the UK market is undeniably cheap – ask any UK fund manager.
There appear to be two main reasons for this: a lack of trust and a lack of care.
Friday Briefing: Change, reflection and business speak
Firstly, since 2016, we have failed to get behind the fact that Brexit has happened and, frankly, we need to just get on with it.
We had years of arguing over deals, and when we eventually agreed on one, the party that proposed it tore itself apart over the thing.
Add to that the Mini Budget travails, this week’s ‘evil plotters’ and a lack of commitment from the opposition to certain key economic policies, I’d say it’s understandable why the UK isn’t trusted right now.
For the second point, I’m going to defer to the wisdom of a friend.
Beyond oil, financial services and gambling, the UK doesn’t currently offer a huge amount that can’t be found elsewhere trading at a more reasonable value.
“We can scream it’s cheap all we want, maybe people just don’t like what we’re selling.”
My point is this – the UK is absolutely an unloved market at the moment, which, twinned with public listings also being a bit more out of fashion currently, will naturally lead to a downturn in fortunes for the FTSE.
However, most of these issues can be resolved by just taking a deep breath, accepting that it’s a bit rough right now, and understanding that, in all likelihood, this stuff will sort itself out.
For everyone declaring that we can turn the market around by fiddling with the internal workings of a well-respected bourse, perhaps don’t throw the baby out, particularly if there’s no bathwater to begin with.
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