Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Merin Talks Money Weekly round up, our debrief on the biggest stories and markets and economics and a few other things too, because sometimes we get sidetracked. I'm Meren Sumsp, Web Editor at Large for Bloomberg UK Wealth.
And I'm joined Stepics in your report and author of the Money Distilled newsletter.
That is the second time in two years you've managed to read your own bit.
And tell everyone who you are.
I almost forgot it now, but.
I think it's proof were anyone listening and saying that sometimes we're stuck in our ways so we don't have any ability to learn, and that kind of thing you live in proof that we have ability.
To learn on this podcast, That's what I'd like to hear.
Yes, so listen with confidence, everybody. Now, some of the things that we've been worried about for ages, they're really coming to fruition now.
You know.
One of our our sister newsletter, the London Rush, one of its headlines this week was the London Rush Oman leapfrogs London and it's all about have we just haven't got any IPOs here anymore?
So Malaysia, Luxembourg as well as a one of.
All raised more IPOs this year than here in London, which is now twentieth in the list.
Of global listening venues.
You know, and a few years ago we would have been in the top couple, well maybe top five or six, and twenty years ago.
We would have been one or two.
It's good.
That's pretty miserable.
And only this week we've seen another one of our big companies just go ashted, right you wrote about this.
Yeah, Acetate is a too high a company and it's called Diestad because it started to do in Ashted and Sudy in England for American musters. But no, it is something like me. It's like ninety eight percent it's profit in the US. It's the second biggest to higher industrial equipment hired company out in the US called the sun Belt. And they've decided after I think they denied it maybe about a year ago, but they have been talking about it for a while and now they've decided that they're
going to shift a primary listening to the US. They'll keep a secondary one here. But the point is it's like this is this is like the twenty fifth biggest company in the foots one hundred, so we're not talking about a little company here, and there's a lot of logic to the move. I think that's reasonable, we say, because obviously it's fundamentally it is now a US company
with a UK subsidiary. And also they did experience a bit of pushback when they were looking to give the chief exec a bigger pay packet, and by American standards, you know, that's that won't happen when they go away, and I think that I think that's quite an important thing to remember, because they sort of mentioned that in passing,
but they didn't go big on it. But when you think about it, the people who are making these decisions fundamentally are the management team, and you know, they're the ones who are not only seeing you know, the benefits the extra liquidity, the benefits of perhaps a higher valuation, which I think is debatable for this kind of company anyway, but also the benefit of a directly higher pay packet without getting criticism from the press, or criticism from proxy
advisors or kind of feigned criticism from fund managers. So I think that's actually an issue that we really need to pay a bit more attention to. Whether you know whether we like it or not. I know there have certainly been times in the past whenever me and you
have both questioned the size of CEO's pay packets. But I think maybe we've kind of or think maybe the atmosphere has swung too much in the opposite direction, because it's definitely a big factor whenever people are choosing where they're going to list.
Yeah, now I get that. I mean, I I see why companies want to move. They move to deeper, more liquid markets, markets that investors are more a market should I say that investors are much more interested in one where they know they can get a much higher evaluation and also one where they know they can be paid more.
And you and I, you know, we're pragmatic.
We thoroughly disapprove of people being paid enough to, as we always say, transform the fortunes of their family for many generations, purely for stepping into running company that somebody else started and somebody else innovated into greatness.
And we don't approve of that.
But we also we'd take that any day over the collapse of our own equity markets, wouldn't we? Yeah?
Absolutely? I mean I think the other issue and I guess this leads we're going to talk about. But there's a couple of things you've got If a did can make the argument that is basically a US business with you know what kind of UK unit, No, the promise is a lot other see one hundred companies that could basically make the same argument. Yeah, that's something closer ties to UK. But one that one of the guys that follow on Twitter was mentioning to me yesterday was like
Pearson for example. So Pearson's sort of changed itself from being a kind of slightly you know, stuck in the MUD's educational publisher and obviously went through an awful lot of problems in that transformation, but now it's sort of a digital education company and it does make something like seventy percent of his money in North America, and you know, I think you could make a strong argument that it would fetch a higher multiple in the US because it
is a kind of techy company relative to what it might fetch in the UK. So that you know, and that's just one example. So if they all sort of start to think the same way, then you know, we are kind of in trouble because the pipeline and this is I mean, this is the fundamental problem, the fundamental promise. The pipeline isn't getting refilled. A UK company makes it
big in America, that's a good thing. If it then chooses to go and listen in because most of its management team and employees are there, then you know, fear enough. But we need to have more companies coming through at the bottom end to replace them, and we just don't, you know, we don't.
Yeah, So we're losing companies to listing abroad, but we're also losing this forget what we've talked about a lot on this podcast. We're losing companies to the private markets relentlessly, some some just merging, some mem and a of course, but also that are leaving the market all together. And that just comes and comes and comes, and the number of stocks on the UK market just falls and falls.
And I just had one.
You know how, sometimes John, when we talk about the NHS, Yes, we always say where is the CEO?
Why is she never out there? Why is you never hear on the radio, never hear.
Her on the teally explaining how she managed to make such a MESSI of the whole thing, right.
Just not there, just not there.
We have to listen to, you know, various government ministers who have any limited control over this vast organization, or people from groups outside the NHS, but we very rarely hear from the person actually in charge. And it makes me really irritated because anyone doing a lousy job should be called out.
For that publicly, right, Yes.
And the other person when I'm looking at this is I'm thinking, well, I want to check who is the CEO of the London Stock Exchange, you know, And here she is, Julia Hoggan, and I'm sure she's very nice and all that, but I don't hear her voice out there publicly fighting for the Stock Exchange, fighting for our ecoity markets.
I mean, I think that's a fat point.
Oh good, good, good, because I suddenly felt, God, Mary, you're being really mean here.
Stop this. But actually, I you know this.
The Stock Exchange is such an important part of the UK's financial ecosystem. I mean, it's absolutely vital. This is as vital to the continuation of the UK as the NHS, possibly more so. Why aren't we hearing her voice? I mean, maybe there's lots going on behind the scenes. I don't know, but if there is a lot going on, behind the scenes, it's not going very well, is it.
I think you're read in terms of the visibility, because I mean the people I eat into your most a bit less topic of the like, you know, the guys that people hunt, the sorts of people talking about, you know, people who have broke us to smaller companies. I think what you normally hear is that the IPO pipeline is
looking healthy. Well whats to that? On mutter links to that effect, But I have to see that looking at the statistics, it's like it's one of these things like, oh, it's all going to get better than six months time, and then six months comes and goes and nothing's happened. So no, I mean, I think this is a big issue and that more campaign and from that front would probably be helpful.
Oh maybe more obvious campaigning.
Anyway.
The other thing that we should talk about is these companies going private and what that means, not just in the UK but in the US and our colic John Authis is written about that this morning.
Rather go just leave here writes about everything.
Rather well, yes, yes he does. I feel a stab of professional jealousy reading this particular one, But you don't.
We've written all this stuff too.
We've been talking about, you know, pensions having been forced into private et cetera.
For ages.
There's a very good start in the Low I don't know if you saw. There's a wee chart in it, and this is basically the piece. It's all about why pensions going into private companies rather than public companies. And the basic point is that, well, the number of public companies has actually created well, the number of private companies is rocketed, but I hadn't realized the extent it's. In two thousand, the number of US public companies listed companies
was about seven thousand. The number of private companies was two thousand, and this is accordinated some research by a Munday and pitchbook can create research. And in twenty twenty one, the number of listed companies it's four thousand, eight hundred and five, so you know, it's dropped by what about a third more than a third, And the number of private companies is nine nine hundred and fifty eight, so it's almost five times as many as they were in
two thousand. And you look at that and you're kind of like, well, okay, no wonder you know, the kind of appetite for private markets has gone up. That's where all the companies are now.
Yeah, I mean, the one thing that we should say about that is that, I mean, I don't know if the numbers were in this article.
You read it more heavily than I did.
But it's also true that the listed companies tend still to be bigger. So the overall value of the lifted markets is still very significantly higher than the overall value of the private markets. Is that fair?
Yees? So the value is still higher. But what is also interesting is that I'm trying to what this properly because this Andrew apthor On at Sockchain, who always does a lot of interest in sort of stuff on this Yeah, basically points out the ratio is stock market's total market cup to the price has basically been flat for about twenty years. So basically what he's saying is the evaluations are going up rather than the size of the market.
Yeah.
Yeah, that's been in process for ABD twenty, isn't it. And that's obviously to do with de equitization, and it's more pronounced than the US, but it's you know, it's happening in Europe as well, and the and yeah, I mean, it's just, well, we know the reasons are. The reasons are primarily because of the low interest rate era making
it easier to swap kind of shares for debt. Basically, de equitizations are problem everywhere, and I think that it is worth looking at the issues in the UK specifically in that context. I do think the UK could be doing a much better job of getting its share of that decreasing pie, if you like. But at the same time, I think it is worth flagging up that it's not
a UK only issue. And one of the reasons we feel it more is because we used to be the top financial market alongside New York and now that's just not the case anymore.
Yeah.
But the other thing I would say is that this this should be reversible. I mean, John quote one of the attention upon executive speaking to the Amundi researchers who wrote this report, and if you look at the list of things that they list of reasons they give for not wanting to be listed, and these are all things John, that you and.
I have talked about on this podcast before.
Don't know many times how many times, but here they are growing investors. Short term is bureaucratic listing requirements and excessive regulatory scrutiny.
These have been augmented.
Lately by the share buy backboon that enhances earning perst share, the contracting pipeline of IPOs. It means that fewer growth companies are seeking listing and the cheap availability of capital elsewhere's interest rates plunged in the last decade. There are few public companies now that we're forty years ago. They are on average much larger and older. We know all that, but if you look at the list of reasons why people don't want to list companies.
These are reversible.
You know. There are lots of ways to make investors less short term. There's lots of ways to change the listing requirements to make it less bureaucratic, make it less onerous, make it less expensive, make people more willing to be directed on listed companies, et cetera. There are lots of
things that can be done here. I mean, I don't want to come over the stamp duty argument again, but listeners go back and look at what John and I have written and spoken about when it comes to stamp duty on UK equities on another thing out there.
So all this is reversible.
Are you listening, Julia, So it seems to me that I don't understand why we're not working harder and faster on this. I'm constantly hearing about all the conversations that are going on behind the scenes to try and make the UK a better place to list and a better place to be a listed company, But I don't see
any progress, and I simply don't understand it. Given the importance of our acculty market to our entire infrastructure, as I keep saying, why would you not find a way to support it, Why would you not find a way to help it grow?
Mysteries, John, mysteries?
I mean the incentives that all stacked in the Lorong direction is that genuinely think it's that simple. We've got a culture safetyism, and the safetyism comes about from the fact that all the regulators and all of the politicians would rather be told off mildly for having two weak growth than be told off aggressively for something blowing up at some point in the future. And that that's literally it. And it's been like that since two thousand and eight
for obvious reasons, and it's only got worse. So it's just we have a very compliance heavy world, and I mean we had plenty of box ticking before two thousand and eight. I mean, I think anyone who talks about light touch regulation that's kind of just you know, away with the fairies. But the point is the overall attitude has changed, and so it's nobody the people who can allow this to happen don't see any real benefit from allowing more risk tas taking a more risk taking culture.
And I think that's a major problem, and I think that's probably only going to change with politics. Actually we need something that's more can to can the Trump mosque merely shift that.
Makes complete sense.
But if that's the case, you know, there's four more years of this, more more years, more than four more years, Well we just have to say and watch our stop markets slowly die. And with it, you know, there goes shareholder democracy. They're going to shaholder capitalism. There goes the way that that we think that ordinary people can be pulled into supporting markets and supporting capitalism because of their participation in those markets. Those markets go. So does that
rather nice theory? Read my book on the matter.
Yeah, it's very good.
Yeah, So you know, there's so much to worry about it, but we will watch it.
We will hope for progress. Julia call us.
If you have any thoughts on this, or perhaps if you're doing anything, we'd love to hear about it before we go. I just want to talk about one other piece of misery. One of the platforms is sent round a a few calculations on how much all our taxes are going to go up in twenty twenty five. Tax burden is set to rise by one thy two hundred and sixty one pounds for mid learners and three eight hundred and thirty six pounds for those on one hundred thousand pounds in twenty twenty five due to a triple
wormy of tax changes. And so they've looked at let's look at the bottom one someone earning this is Interactive Investor, by the way, showing that someone earning an annual salary of thirty five thousand pounds, who also realizes a ten thousand pounds capital game and receives two thousand pounds in dividends in twenty twenty five, will pay one two hundred and sixty one pounds more.
So you know it's quite a lot of money.
Yeah, I mean would I mean it's it's a good reason to make sure that you're using your annual allowances and trying to make sure that you don't have any capital gains exposed.
There's literally nothing I can say on this podcast that doesn't bring you back to advising people to use their allowances.
Is that well gain No, it says the it's the it's the stereotypical financial advice, but it's also about the only thing that you can do.
It's also up.
I mean, it is the best advice. Could you your sixty grand a pension, You've got your twenty grand of ISA, if you're married in a simple partnership, you've got both of.
Those things, right.
Yeah.
Anyway, this is a good reason, by the way, everyone to go back and listen to our podcast from earlier in the week about why to get married, because again there's a list underneath a spreadsheet from the platform about all the ways that you can try and cut this liability, and one of them is you get at.
The marriage allowance.
Yes, yes, go back and listen to our podcast earlier in the week, and for heaven's sake, get married anything to save tax.
Right, yeah, absolutely, just go out there, faint somebody.
It's easy, yeah, anyone, and then if exactly, your happiness will go up as well. Remember all those studies we talk about those earlier in the week. Two get married, be happy.
Or you know, maybe not, make sure it's the one.
Yeah, nothing is simple. Nothing is simple.
Thanks for listening to this week's Maren Talks Money debrief. If you like our show, rate review, and subscribe wherever you listen to podcasts. Also be sure to follow me in John on x or Twitter at marins w and John Underscore steppec.
This episode was produced.
By some Siety, production support and sound designed by Moses and Question and comments on this show and all our shows always welcome. Our show email is Marin Money at Bloomberg dot net. Want to listen to episodes of Marin Talks Money ad free, become a Bloomberg dot com subscriber today check out our special intro offer right now at bloomberg dot com.
Forward Slash Podcast Offer. Check out our special intro offer right now bloomberg dot com.
Forward Slash Podcast Offer, or check the link in the show notes. You'll also unlock deep reporting data and analysis from reporters around the world. If you're already at bloomberg dot Com subscriber. Connect your account within Apple Podcasts to listen to this episode ad free.