London in the doldrums as stock market prices collapse: The city hopes for a recovery in 2024
The city is hoping for a recovery in listings next year after a slump in business in 2023.
Analysis by accounting firm EY found there were just five listings in the UK in the third quarter of the year, raising £359.8 million.
That was down from eight in the same period last year, when £565.5 million was raised.
This continues the so far bleak developments in 2023 and comes amid deliberations in the city about its status as a financial center.
London’s reputation has been damaged in recent months by Cambridge-based chip designer Arm’s decision to list in New York rather than the UK, as well as moves by companies such as building materials group CRH to shift focus to the US.
Listings collapse: Analysis by accounting firm EY found there were just five listings in the UK in the third quarter – compared to eight in the same period last year
In the first nine months of 2023, 23 UK-listed companies raised £953 million.
A year earlier there were 34 such listings, raising £1.16 billion over the same period.
Global activity also fell, with 968 so far in 2023, a 5 percent decline from 2022. Total capital raised, £84 billion, fell 32 percent.
However, things are looking better on Wall Street lately, most notably Arm’s blockbuster £43bn initial public offering (IPO) last month, which saw the company’s value rise to £50bn on its first day of trading.
Scott McCubbin, UK and Ireland IPO lead at EY, said: “Challenging market conditions, exacerbated by high inflation and rising interest rates, have meant IPO activity continues to face obstacles.” However, there are reasons to be positive be.
“Several companies that postponed their IPOs earlier this year are now planning to be ready to go public when headwinds ease.”
“In addition, there is an increase in activity in the US IPO market, which typically has a positive impact on other markets, so we expect a rebound in activity in 2024.”
In London, the biggest fundraiser last quarter was money transfer group CAB Payments, which raised £291.5 million.
Politicians, regulators and city leaders have struggled to push through reforms to make London a more attractive venue again.
McCubbin said: “Despite the muted activity, London still has the fundamentals required to be an attractive global listing destination, including an exceptionally strong financial advisory sector, a well-regulated stock exchange and a liquid investor base.”
The Global Financial Centers Index – a report released last week – showed that London is closing in on New York as the world’s leading hub, while European rivals such as Frankfurt and Paris do not even make the top ten.
The city was overtaken by Wall Street in 2018 and while it needs to catch up, it faces stiff competition with Singapore in third place and Hong Kong in fourth place in the rankings.
Meanwhile, David Schwimmer, chief executive of the London Stock Exchange Group, said the doom and gloom about the city had been “exaggerated”.
EY figures showed the Americas has had a strong 2023 so far, with stock market revenues up 159 percent, while the Asia-Pacific region saw a 41 percent decline and revenues in EMEIA (Europe, Middle East) markets , India and Africa) fell by 41 percent and fell by 44 percent.