Things are only getting better: the London Stock Exchange’s 2024 performance to date

Despite the media's continued critical stance, the London Stock Exchange (LSE) has demonstrated a high degree of resilience thus far in 2024, turning in an enviable performance that may come as something of a surprise. Below are some key statistics and observations that highlight the UK market’s improving position, as well as its significant potential:

£19bn raised Year-to-Date: This figure already surpasses the total amount raised in the UK 2023. Admittedly 2023 wasn’t our finest year, but the 2024 performance to date does indicate improving investor confidence and growing activity in the market. A number of notable capital raises have occurred in the past few weeks, including £50m for Rosewood, £150m for Sirius, and an accelerated bookbuild (ABB) by Moonpig, perhaps suggesting an acceleration in momentum.

Two out of five of this year’s largest global equity deals occurred in the UK: Haleon, the maker of Sensodyne toothpaste, raised £2.4bn from shareholders in Q1 – the largest equity capital markets deal globally at the time. This was surpassed in Q2 by National Grid’s £7bn raise, which still stands out as the largest primary raise in the world this year. It is also, the largest raise in the UK since 2009. Furthermore, of all deals globally this year, it is second only to the Saudi Arabian government’s sell down of £12 billion in Saudi Aramco shares.

London was the world’s busiest market outside of the US and India: The LSE has consistently been a major hub for market activity over the past decade, often ranking just behind the US and China. With a subdued China and India on a charge, the LSE has retained its third-place position such that, as the world’s sixth largest economy, we continue to punch well above our weight in terms of stock market activity. 

The UK is addressing challenges through market reform: The UK government, the Financial Conduct Authority, the LSE, and others, are working to reform the UK’s markets to ensure they are future-proof. Initiatives include:

• Merging the premium and standard segments into a single “commercial companies” category to simplify the regime and encourage IPOs.
• Permitting issuers to have dual class share structures which can confer greater voting rights on certain parties such as founders to make listing a more attractive proposition to business owners.
• Abolishing requirements for shareholder approvals on significant transactions and related-party transactions to facilitate market activity.
• Research rebundling, in which MiFID II rules are reversed such that equity research can be included as part of an asset manager’s fees to brokers.  This is expected to stimulate more equity research, ultimately leading to improved liquidity.
   

In conclusion the tide does appear to be turning. The UK has suffered in recent years from fund outflows and lower valuations, but this also will have had the benefit of flushing out poorer performing companies, or those that perhaps should never have been listed to begin with, to leave a cleaner, healthier market.

This, alongside the increasing size of capital raises and higher levels of market activity seen in the year to date, puts the London Stock Exchange on a strong footing. With market reforms offering a further boost, the future for London looks increasingly promising.