Prominent fund managers have expressed deep conern over the negative perception of the London Stock Exchange, a sentiment crystallised after discussions with Downing Street concerning this pressing matter.
Nick Lawson, CEO of investment house Ocean Wall, labelled UK equity markets as “rock bottom” subsequent to engaging with Varun Chandra, the government’s special business adviser, as reported by City AM.
The conversation about rejuvenating the stock market also included top stockpickers like Newton Investment Management’s David Cumming, Andy Brough of Schroders, and M&G Investments’ Michael Stiasny, reports the FT.
On Radio 4’s Today Programme, Lawson mentioned: “This is the first time I’ve felt that Labour want to listen,”.
He observed that UK equities previously accounted for 45% of UK pension fund investments prior to 2000, but this figure has now plummeted to a mere 3%, leading to reduced liquidity and diminished values of British stocks.
Amid heightened speculation, there are whispers that the government might enforce a mandate requiring pension funds to allocate specific percentages into UK equities, aimed at bolstering the faltering stock exchange.
Lawson noted a sense of urgency: “I think there’s a feeling now that we don’t have long left,” he said, and disclosed that during the meeting, a manager from Schroders remarked: “I am the unofficial liquidator of London’s stock exchange.”
Foreign entities are increasingly setting their sights on UK firms, drawn by the appealing affordability of British shares and a resulting trend of more companies being taken private rather than going public.
“Many brilliant UK companies now have become value traps, that’s why they’re being bought by private equity and overseas buyers,” remarked fund manager Lawson.
The debate heats up as this narrative counters star fund manager Terry Smith’s recent assertion claiming a need for “better companies” in the UK to attract investment.
Brushing off Smith’s notion that the majority of the UK market doesn’t rise to “the quality required” for his portfolios, Lawson dismissed it as “absolute nonsense.”
