FTSE Giant Glencore Considers Ditching UK Stock Market in £40bn Blow

In a significant development that could shake up the UK's stock market, FTSE 100 giant Glencore is reportedly considering ditching its primary listing on the London Stock Exchange (LSE) in favor of the New York Stock Exchange (NYSE). The move, driven by the desire to achieve a higher valuation for its shares, would be a major blow to the UK's beleaguered stock market, which has been facing a wave of departures by companies seeking better trading conditions elsewhere.

Glencore, a mining and trading company with a market capitalization of £40 billion, has long been touted as a success story for the UK's capital markets. Its departure would likely raise fresh questions about the future of fellow mining and oil and gas companies such as Rio Tinto and Shell, which are also listed on the LSE.

Gary Nangle, Glencore's chief executive, stated that the company wants to ensure its securities are traded on the right exchange where it can get the optimal valuation for its stock. He noted that there have been questions raised previously around whether London is the right exchange, and the company is exploring all relevant exchanges that would make sense for Glencore, including the NYSE.

The potential departure of Glencore comes as the LSE is on course for its worst year for departures since the financial crisis. A total of 88 companies have delisted or transferred their primary listing from London's main market this year, with only 18 taking their place. This marks the biggest net outflow of companies from the main market since 2009, while the number of new listings is also on course to be the lowest in 15 years as initial public offerings remain scarce and bidders target London-listed groups.

The exodus has continued despite efforts by the UK government, regulators, and the LSE to boost the City's attractiveness by reforming market rules and the domestic pensions system. Ashtead, the equipment rental company with a £23 billion market valuation, this month became the latest big business to propose moving its primary listing from London to New York. It would join six other FTSE 100 groups that have ditched the blue-chip index in favor of overseas venues since 2020.

Including Ashtead, these movers had a combined market valuation close to £280 billion on Friday — about 14 per cent of the current total value of the FTSE 100. The defectors include £39 billion gambling giant Flutter, which owns Paddy Power, and £55 billion building materials group CRH. Both have moved their main listing to New York in the past 18 months.

A series of takeovers by private equity bidders has also depleted the exchange. Cybersecurity group Darktrace and investment platform Hargreaves Lansdown are among those that have agreed to be bought this year. "We cannot be taken seriously as a global leader in finance if we do not have a thriving equity capital market," said Charles Hall, head of research at stockbroker Peel Hunt. "The UK market does not have any god-given right to be a leading listing venue, but it requires nurturing and support to be successful in a market that is increasingly global," said Hall, adding that "more companies will depart" unless action is taken.

The broader implications of Glencore's move for the UK's attractiveness as a listing destination are concerning. As one of the UK's leading blue-chip companies, Glencore's departure may discourage other multinational companies from choosing London as their primary listing venue. This could lead to a further exodus of major companies, potentially impacting the FTSE's composition and the UK's standing as a global financial hub. However, the UK's labour market slowdown and investor confidence in the eurozone reaching a 13-month low may also contribute to this trend, making the UK less appealing for listings.

In conclusion, Glencore's decision to explore a move away from the LSE has significant implications for the UK's stock market and its attractiveness as a listing destination. While the impact on the FTSE 100's performance is expected to be minimal, the broader implications for the UK's financial hub status are concerning. As the UK navigates economic challenges and geopolitical tensions, it is crucial for the government and financial institutions to address these issues and promote the UK as a competitive listing venue.