The Investor Forum, an influential group of big institutional investors, has warned that UK equities as an asset class will continue to diminish “unless companies, investors, regulators and policy makers accept the reality” that London-listed firms “must now compete for capital in global markets.”
The Forum’s executive director Andy Griffiths said the “declining relevance” of UK equity markets to institutional investors over the last 25 years has been “breathtaking.”
The Forum represents 54 major organisations with £26 trillion in global assets under management and £680 billion invested in UK equities — about 30% of the FTSE All-Share market cap.
In its Review of 2022, the The Investor Forum warned: “The status, and value, of UK-listed companies needs restoration.
“Traditional domestic owners, notably UK pension funds and insurance companies, have diversified away from the UK in the last 30 years and UK companies must now compete for capital in global markets and relative to other asset classes.
“Unless companies, investors, regulators and policy makers accept the reality of this situation, UK equities as an asset class will continue to diminish — to the detriment of all economic participants and society more broadly.
“UK companies must ensure that they can compete for money on a global scale, and reforms should encourage and incentivise long-term ownership.”
In its conclusion, the Forum said: “There is much work to do in 2023 to enhance the attractiveness of the UK’s public markets, and investors have a vital role to play in creating vibrant, healthy markets on which companies can list.”
Andy Griffiths, Executive Director of the Investor Forum, said: “The declining relevance of UK equity markets over the last 25 years has been breathtaking.
“It is crucial that the focus of any reform recognises the global nature of financing and seeks to create an environment in which UK listed companies can once again thrive.
“We cannot simply hope for a better outcome — practical steps are needed from companies, investors and regulators if we are to create a vibrant marketplace which can attract international capital.”