It’s a euros triumph already: the value of all the companies on the London stock market is greater than all those on the Paris exchange: $3.18tn plays $3.13tn, calculates Bloomberg.
Actually, we should probably contain our excitement. First, the position is not groundbreaking: until only a few years ago, London was miles ahead as the biggest stock market in Europe. Second, the current position could reverse in an instant: it would merely take a marginal improvement in the value of fashion stocks such as LVMH, Hermès and Gucci-owning Kering that are heavyweights in Paris.
Third, the UK’s renewed leadership is only slightly a result of strength in the FTSE All-Share index. It is mostly a case of investors having a wobble over French assets, especially the banks, after Emmanuel Macron’s decision to call snap legislative elections. The related fall in the euro against sterling plays to the same theme.
Fourth, who cares anyway? Relative size versus Paris is a diverting yardstick, but success for London should really be measured in terms of quality of new listings, capital raised, the ease of doing business and so forth. The fascination with pure size quickly leads to the current silly idea that it would somehow be a “boost” for London if Shein, the Chinese-founded, but Singapore-based, fast-fashion retailer could be persuaded to list here, carrying a supposed £52bn valuation.
Come on – the only reason Shein would choose London is because its application to join the US market has been stuck since last November amid controversy over alleged labour malpractices. A willingness to take New York’s castoffs, whatever their size, is not obviously a way to restore the lustre of London. Quite the reverse.
What would count as success? Well, here’s a small example from another weekend story: the founders of Melrose Industries, the deal-making company that bought the aerospace and automotive group GKN for £8bn in a hostile takeover in 2018, will return to action with a London-listed investment vehicle. Rosebank Industries – a sort of Melrose 2.0 – will raise £40m-plus via an offering on Aim, London’s junior market, Sky News reported, before hunting for deals of up to $3bn and then moving up to the main market.
It’s perhaps not a surprise that Simon Peckham, who bowed out as chief executive of Melrose earlier this year, is sticking to London rather than being tempted by, say, the US. The UK is where he and his colleagues made their names and enriched investors (and themselves, spectacularly). But the alternative was probably to pursue their private equity-style model of “buy, improve, sell” away from the public markets altogether. Given their record, it would have been a simple matter to raise a few quid from the vast pools of capital sloshing around in private markets.
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Adopting a quoted vehicle is therefore a welcome vote of confidence in the public arena, whatever critics say, who persist in mischaracterising Melrose as “robber baron” capitalism (it really isn’t: GKN was genuinely improved with investment). The London stock market would be a livelier place if there were more like it. Shein, on the other hand, we can live without.
