17 November 2022

FT: France challenges UK for title of Europe’s biggest equities market

Paris is challenging London’s lead as the home to Europe’s biggest stock market, eating away at Britain’s position after Brexit as the continent’s most important financial centre. The market value of all the companies listed in the French capital has soared from $1.8tn at the start of 2016 to $2.83tn, closing in on the value of London shares at $2.89tn, according to Refinitiv.

“This gap between London and Paris in the domestic market is a lot smaller than it used to be or should be,” said William Wright, founder of New Financial, a UK think-tank. “It’s the result of the poor performance of UK stocks, the poor pipeline and performance of UK new issues, and the terrible performance of sterling. It’s clearly not great news for London — and Brexit is a big factor in all three.”

The narrowing gap has worried UK policymakers eager to tout the benefits of leaving the trading bloc and reestablish London’s post-Brexit appeal as Paris, Frankfurt and Amsterdam take slices of its daily activity. London has retained its status as the world’s leading hub for foreign currency and derivatives trading, even though its share of both markets has slipped.

But the gap it traditionally enjoyed in equities over other European centres is evaporating since Britain left the Single Market. More than €6bn of European-listed shares typically traded in the City left on the first trading day, allowing Amsterdam to claim the crown as the most active equity market. The value of shares on London bourses in dollar terms been pressured by a fall in the pound since 2016, the year of the Brexit referendum. Sterling has dropped by almost a fifth against the dollar since January 2016 while the euro has only depreciated by about 4 per cent. “Sterling has depreciated significantly since the Brexit vote, leading to a higher rate of mergers and acquisitions, with private equity investors and corporate buyers taking advantage of the UK’s valuation discount to other stock markets,” said Sue Noffke, head of UK equities at Schroders....

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