Julia Hoggett says negative sentiment and tax reform affect LSE listings

London Stock Exchange Chief Executive Dame Julia Hoggett stated that negative public sentiment and critical media coverage have actively discouraged companies from listing on the London market. Speaking on Big Boss Interview, Hoggett argued that while these perceptions influenced corporate decisions three to four years ago, they do not accurately reflect the current scale and competitive strength of the London financial ecosystem.

Market Sentiment and the Cost of Negative Narratives

She noted that markets operate fundamentally on sentiment, suggesting that the city’s reputation has suffered because the nation has been “throwing shade at ourselves.”

“We need to stop throwing shade at ourselves as a nation and being a bit surprised if it’s a bit dark, a bit chilly and a bit damp,” Hoggett said during the interview.

The impact of this narrative, according to Hoggett, led some firms to delay their initial public offerings (IPOs) or seek listings in other jurisdictions. She emphasized that this trend was most pronounced several years ago, yet the lingering perception continues to challenge the exchange’s ability to attract new business.

Hoggett Defends London Market Performance Data

To counter the prevailing critical narrative, Hoggett highlighted the exchange’s performance data. She identified London as Europe’s largest equity market by capital raised in the current year, the world’s second-largest market for fixed-income securities, and the leading global hub for closed-ended funds.

She also addressed the trend of British companies opting for listings in the United States. Hoggett challenged the success of this strategy, citing performance figures for a group of British businesses that raised capital in the U.S. since 2014. Her data indicates that a significant number of those companies subsequently delisted, and only a minority are currently trading above their original listing prices.

Hoggett also pointed to the UK’s strong pipeline of high-growth businesses. She stated that Britain produces more companies valued at over $1 billion than any other nation outside of the United States and China.

Hoggett Advocates for Domestic Investment Tax Reforms

Beyond addressing market sentiment, Hoggett argued that structural changes are necessary to keep capital within the UK. She advocated for a shift in the tax system to prioritize domestic investment, noting that while the country possesses substantial pools of savings, too little of that capital is directed toward British firms.

Hoggett identified the stamp duty on share purchases as a “pernicious tax” that should be abolished. Recognizing the immediate fiscal constraints on the government, she proposed a phased approach to reform:

• Providing tax relief for UK investment through Individual Savings Accounts (ISAs).
• Extending similar relief to eligible pension funds.
• Introducing a 10% dividend tax credit for investors.
• Implementing inheritance-tax incentives specifically linked to pension investments in British companies.

When questioned on whether ISA tax advantages should be restricted exclusively to British investments, Hoggett responded that the idea is worth exploring. She maintained that her objective is not to lower returns for pensioners, but to ensure that the tax environment inherently favors domestic corporate growth.

Strategic Considerations for Corporate Issuers

For companies evaluating their listing options, the current market climate presents a complex set of variables. While regulatory reforms and tax incentives are proposed to bolster the domestic environment, firms must still weigh the immediate costs of capital against long-term valuation prospects.

As the debate over the competitiveness of the London Stock Exchange continues, the focus remains on whether policy changes can effectively reverse the sentiment-driven flight of capital.