The impact of minimal new listings activity over the past two years was flagged by Peel Hunt today after it warned the FTSE Smallcap will cease to exist by 2028 if current trends continue.
The City firm said the “hopper” was not being refilled at a time when lowly-valued stocks are increasingly being picked off by bidders.
Compared with 160 stocks in 2018 and 114 at the end last year, the bank said the present rate suggested there’s a danger the last company will leave the FTSE Smallcap by 2028.
It warned: “The pace of de-equitisation is relentless and will inevitably continue given the low valuation accorded to UK companies.”
The bank said there were deep-rooted issues in the UK regarding new listings and health of equity capital markets, with material consequences for long-term economic growth.
The downbeat message from Peel Hunt came on another day of underperformance by the London market. Big fallers included BT Group, which dropped 2.95p to 106.8p after UBS kept its “Sell“ stance with a lower target price of 100p. Marks & Spencer was the best performer, up 2.5p to 264.5p.
Unlike leading benchmarks on Wall Street and in Europe, the top flight has failed to set record territory in recent weeks. It came close yesterday when the FTSE 100 topped 8000, only for uncertainty over the outlook for US interest rates to spark a sell-off.
Today, Peel Hunt also said that IPO activity in London had remained subdued in London, even as it picked up in mainland Europe. But it added that there were early signs of a recovery on the way.
