Issue of the week: London resurgent?
After 30 years of hurt, there are signs that stock market strength may be coming home
It’s a Euros triumph already, said Nils Pratley in The Guardian. The tournament’s kick-off this week coincided with news that the UK has reclaimed its stock market crown from the French. The value of all the stocks on the London market is now greater than all those on the Paris exchange, by $3.18trn to $3.13trn, according to Bloomberg. “Actually, we should probably contain our excitement.” Until a few years ago, after all, “London was miles ahead as the biggest stock market in Europe”. Moreover, it would merely take “a marginal improvement” in the value of France’s heavyweight fashion stocks – LVMH, Hermès and Gucciowning Kering – to put Paris back on top. A third point is that the UK’s renewed leadership is mostly down to “investors having a wobble over French assets” after the snap election call. A fourth: who cares anyway? “Relative size versus Paris is a diverting yardstick”, but success should really be measured in terms of the quality of new listings, capital raised and so on. On that score, London still has plenty of work to do.
This is a tale of two elections, said Lars Mucklejohn in City AM. The “predicted outcome” in Britain has been welcomed by markets. In France, by contrast, uncertainty has caused chaos. The country’s CAC 40 blue-chip index was at record highs last month, but has just endured “its worst week since 2002”. The “sharp swing” in investor sentiment is evident in the latest Bank of America poll of fund managers, said Farah Elbahrawy on Bloomberg. France has now assumed the UK’s former mantle as “Europe’s least favoured stock market”. Indeed, French political upheaval is colouring opinion about prospects across Europe. The European Central Bank’s latest warning on “fiscal stress in the eurozone” won’t have improved the mood, said Martin Arnold in the Financial Times. It has only increased “investor anxiety about the sustainability of public finances”.
Let’s not overlook London’s turnaround, said Alex Brummer in the Daily Mail. “The obituary for share trading in London has been written many times”, but confidence in the UK as a listing venue is rising: witness the surging price of the local computer champion Raspberry Pi since its recent debut. New York is still a threat, but efforts to revive the London Stock Exchange are under way. Listing rules are being eased, and local authorities and pension funds are encouraged to invest in UK stocks and infrastructure. There’s a long way to go, but it seems the medicine is working. “Despite a ghastly period for the City’s reputation as the home of the free market, I am not abandoning hope.” The fortunes of UK-listed companies are looking up.