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Shell’s Unfortunate Love Affair with the US: The UK Stock Market Saga

Charles Hall from Peel Hunt warns that if Shell goes, it’s going to be an absolute hammer blow for London, with a domino effect dragging BP and big mining companies along.

Posted by John Donovan: 16 May 2024

Don’t Worry, UK Stock Market Is Totally Fine, Says Stock Market Boss as Major Firms Flee for the US

In the latest episode of “The UK is Totally Fine,” the head honcho of the London Stock Exchange, Julia Hoggett, assures us there’s absolutely no panic even as firms worth hundreds of billions decide they’d rather take their chances across the pond. Because, why wouldn’t they?

Bigwig bosses have been crying existential crisis to the BBC, pointing out that major companies are either packing up, considering the move, or being swallowed by foreign private investors. Yet, Hoggett dismisses these concerns with a nonchalant shrug, asserting that the UK is “already punching above its weight.” Well, Julia, if you say so.

A Treasury spokesperson, likely from the Ministry of Wishful Thinking, chimed in to remind us that the UK is “already one of the best places in the world to grow and secure investment.” You know, except for the part where it clearly isn’t, as evidenced by the parade of companies marching towards the exit.

Take ARM Holdings, the Cambridge-based microchip giant that decided New York was a better fit. Flutter, the owner of Paddy Power, is also heading stateside this summer. UK drug company Indivior saw its shares soar just by mentioning it might follow suit. And Shell? The UK’s stock market behemoth? They’ve been coyly warning that they might hop on this transatlantic exodus too. Shell’s CEO Wael Sawan even gave a shout-out to the NYSE, saying, “The welcome we had there was exemplary.” Translation: “The UK can keep its 30% discount, thanks.”

Charles Hall from Peel Hunt warns that if Shell goes, it’s going to be an absolute hammer blow for London, with a domino effect dragging BP and big mining companies along. But don’t worry, folks. Ms. Hoggett insists there’s “no sense of panic.”

As the City of London watches its relevance trickle away post-Brexit, with companies like E-therapeutics jumping ship after 17 years, the likes of Apple, Google, and Microsoft laugh all the way to the bank, each worth more than the entire top 100 companies in London combined.

Yet, amidst this corporate exodus, Hoggett remains unfazed. Stripping out the big US companies’ influence, she argues, reveals a fairer comparison where UK firms aren’t doing that badly. Sure, Julia, and when you strip out the ocean, a desert seems pretty wet.

In a desperate bid to stem the tide, Chancellor Jeremy Hunt will gather finance chiefs at his country residence. Maybe the fresh country air will inspire some miracle solutions.

Meanwhile, Hoggett believes funnelling more UK money into domestic companies is key. After all, UK investment managers only allocate a measly 4% of their assets to UK shares, a sharp drop from over 40% thirty years ago. Other countries do a much better job of supporting their economies with domestic investments, but who needs global best practices?

Despite the exodus, some optimists point to tech startup Raspberry Pi listing in London soon and Chinese fast fashion giant Shein contemplating London after some regulatory hiccups in New York. So, there’s that.

In the grand finale of this riveting saga, Hunt and Hoggett insist that London isn’t burning. Yet, they’re still calling in the fire engines for Thursday’s summit. Because nothing says confidence like an emergency meeting to figure out why everyone’s leaving your party.

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