London risks losing its appeal for stock market listings, some investors and financial executives said, with sluggish trading and low valuations driving more companies to float elsewhere.
“There is zero surprise that Arm has chosen New York, and many other businesses, particularly where the majority of their operations are in the U.S., will follow,” said Iain McDonald, founder of investment advisory firm Belerion Capital. In another blow to London, Flutter Entertainment, the world’s largest online betting firm, said last month it would consult shareholders on an additional U.S. listing.
S&P 500 index companies trade at 17 times 12-month forward earnings, compared with around 11 for the FTSE All-Share index, a gap that has grown in the past decade. But Arm’s decision should be a wake-up call for officials to make Britain a more attractive destination, LSE Chief Executive Julia Hoggett said.
“The UK is taking forward ambitious reforms to the rules governing its capital markets, building on our continued success as Europe’s leading hub for investment, and the second largest globally,” a government spokesperson said in a statement.