Finance bosses call for action on stock market exodus

Observer

21-01-2025

The UK government is facing fresh calls to accelerate its reform of rules in London's financial district (known as the 'City') and stem the exodus of cash away from London's markets, as the new Lord Mayor, Alastair King, urged ministers to develop a more supportive tax and regulatory environment.
Alastair King urged Prime Minister Keir Starmer to go faster with efforts to boost investment into London listed firms, claiming the government's current plans are not going 'far enough'.
'It cannot be logically correct that, as it stands, we do not pay taxes on purchases of international vehicles such as Tesla, but we are taxed on investing in a British brand like Aston Martin,' King said, referring to the stamp duty of 0.5pc tax levied on UK share trading. Changing this 'misalignment' would provide a 'shot in the arm for home grown companies looking to scale up', he added.
Meanwhile, the boss Steven Fine, of Peel Hunt, a leading UK investment bank, said that firmer measures should be taken to reverse the 'exodus' of investors from UK focused equity funds, adding that ministers should offer tax breaks to encourage a 'home market bias'.
The calls could revive the debate around stamp duty on share trading after years of demand for it to be eased or dropped entirely The boss of London Stock Exchange (LSE), Julia Hoggett, described the tax as 'pernicious' earlier this year while fund management group Abrdn and trade body, the Quoted Companies Alliance (QCA), also called for the charge to be retired for FTSE 250 companies.
'Scrapping stamp duty on share trading would send out a powerful signal that the UK and the financial district of London (The 'City') are open for business,' QCA chief executive, James Ashton said, adding that there was no equivalent in the US or Germany (the powerhouse of the EU).
The mayor also called for ministers to encourage more retail investors into stocks and shares ISAs and urged the Chancellor Rachel Reeves to go further in her plans for pension fund reform.
Reeves has outlined plans to consolidate the UK's sprawling local government pension systems in a bid to fuel investment. She said that unleashing a wave of investment from pension funds will be at the heart of the government's 'growth mission'.
'Growth is our number one mission and reinvigorating our capital markets is key to delivering that', a Treasury spokesperson said.
Another LSE-listed firm waved through a take-private deal in the latest of a torrent of exits from the City's bourse. Learning Technologies, an AIM (Alternative Investment Market) listed edtech company, agreed to an £836m takeover from US private equity giant General Atlantic, making it one of 45 listed companies to sell-up or enter talks with a suitor.
According to numbers compiled by Peel Hunt, the total value of take-private deals has now reached a record £52bn in value. Including exits from the LSC and companies swapping their listings to overseas markets, the total value of companies leaving the market is set to go above £100bn according to figures from Peel Hunt.
London's AIM market has felt the brunt of exits in the past year with the total number of companies on the market shrinking to below 700 for the first time since 2001, according to accountancy firm UHY Hacker Young. A total of 16 AIM-listed companies have been bought by private companies last year.
London markets faced further scrutiny last month after Pallister Capital renewed its call for Rio Tinto to abandon its primary London listing, arguing its corporate structure had cost shareholders $50bn (£39.4bn) in value.
In a letter to the board, reported by the Financial Times, Pallister Capital said Rio Tinto's dual listing in London and Sydney had been an 'unmitigated failure'.