Just before Christmas we wrote about the FTSE 100’s 40th birthday which was coming up at the start of 2024.

It felt too much of an open goal not to talk in terms of a mid-life crisis and life beginning at 40.

The fear we expressed then and one which has been reinforced now is the London market, which obviously underpins the FTSE 100, would take drastic steps to feel young again and revive its fortunes.

Nobody should be under any illusions about the challenges the UK stock market and FTSE 100 are facing. A chart comparing its performance to not just the S&P 500, which has benefited from an extraordinary period for US equities, but also its French and German counterparts, tells you everything.

As does the desultory number of IPOs in recent times and an exodus of big names. There are still great businesses listed in this country but the list is shrinking and there is a real absence of fresh blood to replace those which have departed.   

It is notable, looking at the chart, that the gap between the FTSE and Germany’s DAX and France’s CAC 40 benchmarks really began to open up after the Brexit vote in 2016. Foreign money, put off by political instability, turned away and hasn’t come back in the volume needed to breath new life into the index.

The response so far in terms of promised reforms to listings requirements looks like the wrong remedy for the market’s malaise. Voting rights and transparency are just two areas which could be undermined.

Crucially, it seems many of the overseas investors which the UK needs to win over are just as unimpressed. The ICGN (International Corporate Governance Network), which is led by investors responsible for assets under management of around $77 trillion, has raised serious concerns about the proposals, which would weaken corporate governance standards and shareholder protections.

ICGN chief executive Kerrie Waring says: ‘Robust governance structures, high-quality corporate reporting and strong investor protections are essential to a competitive market which safeguards corporate resilience, long-term value creation and ensures economic growth.’

ICGN’s statement was co-signed by major investors and associations representing institutions around the world. Waring adds: ‘Far from being a barrier to growth, maintaining high standards of corporate governance and shareholder protection enables growth.’

UK governance rules are still held up as a gold standard across the globe – they should not be surrendered in a rush to attract businesses to the market at any cost. Instead, the people in charge need to hold their nerve and have faith that over time the attractions of London as a listing venue and a place to invest in great businesses return to the fore.

Worryingly, the ICGN’s comments suggest the regulators at the FCA (Financial Conduct Authority) aren’t listening. 

One thing which could help, although unfortunately this is an area which relevant decision makers and rule makers cannot control, are calmer political waters domestically. 

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