“If you build it, he will come,” whispers a ghostly voice in Kevin Costner’s 1989 film Field of Dreams. It’s a mostly-misquoted line that’s been used to drive scores of corporate and sporting turnaround efforts over the past 30 years.
It speaks to a reassuring belief that if you create something good that works well, the punters will take note. Over the past four years, it also appears to have been adopted with some vim by those shepherding the City of London through its big capital markets makeover.
London has been plunged into a crisis by a lack of fresh listings, an exodus of companies and cash, and a fear that burdensome rules have taken the sheen off the City’s once great public markets.
Regulators and the government have pushed ahead with reforming some of the structural issues feeding into that malaise. The Financial Conduct Authority has committed to overhaul its listing rules this summer; the London Stock Exchange is working hand in glove with government to build a new hybrid public-private market; issues like a lack of dual-class share structures have been ironed out in a slew of ‘reviews’ since 2020.
While there is still work to do in building the City’s field of dreams, those at the top now need to now turn their attention to actually getting investors to turn up. Cash has been flooding out of UK equities for three years straight and investors will need a nudge before they return.
The narrow British ISA and forcing pension funds to publish their equity holdings is a start, but investors will need much more of a carrot than that. Some degree of pump-priming is required and ministers should listen to the City in scrapping taxes on share trading and giving retail investors a reason to back British equities.
As Mark Austin told City A.M. today, you “can’t have capital markets without capital”. News of Shein and Raspberry Pi prepping London floats shows a sign of life, but rather than waiting for investors to turn up, ministers should be giving them a reason to.