The boss of the London Stock Exchange condemned the effect of stamp duty on shares as “pernicious”. Julia Hoggett also asserted that the gloomy “public narrative” surrounding the City was beginning to lift.
Speaking at the City Week Forum, Hoggett launched another attack on the media for exaggerating a listings drought in London. She claimed the media had amplified the scale of the crisis facing London’s public markets, despite recent good news.
Firstly, Cambridge computer firm Raspberry Pi confirmed plans to float. Meanwhile, fast-fashion giant Shein is preparing to switch its listing plans from New York to London.
However, there is a perception that a gaping valuation gap with New York is plaguing the capital’s IPO market. There is also a belief that companies fetch higher price tags on the New York Stock Exchange and Nasdaq.
Scores of bosses have threatened to leave London because they believe the City’s markets undervalue them.
However, Hoggett dismissed the suggestion of a large valuation gap with the US. She claims that a stamp duty on shares weighs down the liquidity on the London Stock Exchange. This forces investors to pay a 0.5 percent charge on UK share transactions.
“There is an argument about UK liquidity being lower,” Hoggett stated. “Given the pernicious effects of stamp duty, there are some structural differences…but there are not material differences in the ultimate total quantity”.
After adjustment for the number of companies on the market, the total quantity of shares trading was comparable to the US, she contended.
Separate data shows that the UK still dwarfs its European peers in terms of total share sales. It has issued $11.3bn this year compared to Paris in second place with $3.4bn, according to Bloomberg data.
The criticism follows calls from City figures to scrap the levy to unlock a flood of capital into the market. Firms including Abrdn, Revolut, and Monzo have all put their names to calls to ditch the duty in recent months.