Rachel Reeves was yesterday urged to take bold steps to revive the UK stock market after a spate of new listings offered hope that London was ‘not yet doomed to irrelevance’.
The Chancellor is considering introducing a stamp duty break for newly floated firms – but some in the City say she must go further and remove the tax on share trading altogether. An exodus of UK-listed companies to New York and a dearth of new listings to replace them has driven fears that London risks losing its status as a global centre for equities. Figures this week suggested the City had fallen below Mexico and Singapore in the world rankings for initial public offering fundraising this year.
And pharma giant AstraZeneca’s decision to list its shares directly on Wall Street stoked fears that this could be a step to a permanent move across the Pond. Figures this week suggested the City had fallen below Mexico and Singapore in the world rankings for initial public offering fundraising this year. However, the City was given a boost yesterday as US data centre group Fermi made its debut on the London Stock Exchange as part of a dual listing with New York’s Nasdaq.
Meanwhile, an IPO in London for challenger bank Shawbrook is expected to be announced in coming days. Shawbrook – which paused listing plans amid market turmoil earlier this year – declined to comment. And an IPO today for Beauty Tech is expected to value the seller of gadgets used by the likes of Kim Kardashian and Serena Williams at about £300million. Chris Beauchamp, chief market analyst at trading platform IG, said: ‘Fermi’s dual listing and the revival of Shawbrook’s IPO shows that London’s market is not yet doomed to irrelevance. It sends a message to Westminster that, with a little more love and attention, it can still compete with other major global financial hubs.’
The Financial Times has reported that the Chancellor is considering boosting the City by exempting investors from stamp duty on shares in newly listed firms. This would extend an exemption that already applies at the point of issue for an IPO by two to three years. The Treasury said the Government was ‘making the UK the best place in the world for businesses to start, scale, list and stay’. Stamp duty on UK share purchases, charged at 0.5 per cent, has long been blamed in the City for holding back the stock market.
Many say it only adds to the temptation for Britain’s savers to pile more money into soaring US tech stocks – as the tax does not apply to American shares. Dan Coatsworth, head of markets at trading platform AJ Bell, said the stamp duty holiday plan ‘would remove a major barrier for some people and potentially attract a broader pool of investors’ as well as possibly encouraging more firms to list. He said that after a relaxation of stock market listing rules last year, it would be a ‘natural next step’.
Coatsworth added: ‘A bolder move would be to remove stamp duty on UK stocks completely, yet the Treasury might be reluctant to give up that tax income stream until it has plugged the black hole in public finances.’ Brendan Callan, chief executive of trading platform Tradu, said: ‘Removing the share tax on new listings would be a strong step in the right direction for the UK equities market, but the Government should go a step further and abolish stamp duty on all share trading.’
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