The stock market future of a third of Britain’s biggest companies is in doubt amid concerns over the UK’s reputation as a place to do business.
Fears are mounting that five of the 15 largest firms in the FTSE 100 could leave amid talk of defections to rival stock exchanges and takeovers by foreign predators.
The five – Shell, BP, Rio Tinto, Diageo and Glencore – are worth almost £400billion combined, or a fifth of the entire Footsie index.
Oil major Shell and miner Glencore are looking at shifting their main listing from London to New York, while Rio Tinto is under pressure from an activist investor to quit for Sydney.
Shell’s troubled rival BP is seen as a takeover target, as is Guinness and Smirnoff owner Diageo. Analysts warned the departure of any – let alone all – of them would hugely damage the reputation of the London market, and Britain as a whole.
Charles Hall, head of research at investment bank Peel Hunt, said the threat of an exodus should be ‘a massive wake-up call for the Government’.
Concern: Fears are mounting that five of the 15 largest firms in the FTSE 100 could leave
Simon French, head of research at Panmure Liberum, called for stamp duty on share trading to be scrapped and the introduction of a British ISA to encourage investment in the UK .
A string of firms has left the City in recent years including miner BHP, building materials group CRH and Paddy Power and Betfair owner Flutter.
London has also missed out on high-profile listings, including Cambridge chip designer Arm which opted for New York.
Russ Mould, investment director at AJ Bell, said: ‘Any further major defections would only lead to further criticism of London as a global venue and calls for someone to do something.
‘There can be no doubt that New York has most of the momentum right now, but with equity market valuations there looking stretched by historic standards, there remains the risk that any switch to the US could come at a deceptively inopportune moment.’
The concerns extend beyond these five behemoths of British industry, however.
The future of AstraZeneca – the Footsie’s biggest beast with a value of £180bn – has long been the subject of speculation given its global reach and increasing focus on the US.
While Unilever abandoned plans to shift its headquarters from London to Rotterdam in 2018 after a backlash from shareholders, the £110billion consumer goods group this month selected Amsterdam as the location for the listing of its Ben & Jerry’s and Magnum ice cream business. Firms outside the top 15 are also seen as vulnerable.
Anglo American fended off a £39billion bid from BHP last year but hopes that it will float De Beers, its diamond arm, in the UK are fading.
Gambling industry insiders think Ladbrokes and Coral owner Entain, whose 50-50 joint venture BetMGM is making waves in the US, could go to New York. But analysts warn moves to the Big Apple may backfire.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘Given the uncertainty surrounding trade, and the unpredictability of Trump’s policies, a knock to sentiment may well see companies re-evaluate the relative stability of the London market.’
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