he flippant answer to the FTSE 100 CEO moaning that his shares are undervalued is this: Go and buy some then.
There’s a lot to be said for that approach; Warren Buffett would approve. But our analysis today that FTSE 100 companies would be worth towards £500 billion more if they listed in New York suggests something quite serious — a structural inequality that puts our top businesses at a major disadvantage.
In reality, our top 100 companies aren’t all going to decamp to New York en masse. If they did, well, even the giant US markets might find their appetite for UK shares quickly sated.
But it is easy to see why newer growth firms regard a London listing as an expensive faff. Once investment bankers, usually from big US financial powerhouses, get to work, it’s game over.
The problem — let’s leave Brexit aside for now — is the desire for UK pension funds to invest so heavily in supposedly low risk government bonds.
The risk suddenly becomes a lot higher if Liz Truss happens to be PM, but that looks like a mad professor’s science experiment which is unlikely to be repeated.
The funds are under pressure to match immediate assets against long-term liabilities, an understandable reaction to Robert Maxwell falling off a boat all those years ago and taking Mirror pension money with him.
It is time to move on from that, to actively encourage City pension funds to take a longer-term view. To bet big on the UK stock markets, rather than just the bond markets.
They should be incentivised to go for it.
