FTSE Russell, the company behind the UK’s biggest stock indices, is making a key change to attract global investors. The index provider will allow shares priced in other currencies—like the US dollar and the euro—to be included in its FTSE UK index series starting in September.
This is a shift from the current rule, which only allows shares priced in British pounds to be eligible. The move is part of broader efforts to make the London Stock Exchange more appealing as it struggles to compete with the US.
A Step in the Right Direction, but Not a Game Changer
London has been losing major companies to the US, with firms like Flutter, CRH, and Ashtead choosing to shift their primary listings to New York. Just last month, mining giant Glencore hinted that it might do the same.
The FTSE Russell change is seen as a small but important adjustment. Mark Austin, a legal expert who has been pushing for the change, called it a “potential game changer” for international companies deciding where to list.
However, not everyone is convinced. Neil Birrell, an investment strategist, believes the move won’t make much of a difference. He argues that it’s more of a “free giveaway” than a real solution to London’s struggles.
London’s Stock Market Is Losing Its Appeal
The UK stock market has seen a sharp decline in listings. In 2024, fewer than 20 companies chose to list in London—the lowest number since 2009. Meanwhile, 88 companies either delisted or moved their primary listing elsewhere, with only 18 new additions to replace them.
One of the biggest reasons for this trend is valuation. Investors in the US tend to assign higher valuations to companies, particularly in sectors like technology. In contrast, London’s stock market is dominated by industries such as banking, mining, and oil, which have lagged behind in growth.
FTSE 100 at a Record High—But Is It Enough?
Despite the struggles, the FTSE 100 has performed well this year, rising 8.4% as investors pull back from US tech stocks. Meanwhile, the S&P 500 has only gained 0.5%. But this short-term rally does not solve the deeper issue: London is failing to attract new and high-growth companies.
FTSE Russell’s decision to allow foreign currency shares into its index is a positive move, but it won’t be enough to stop the flow of companies leaving London. The UK stock market needs deeper reforms—better investor incentives, a stronger tech sector, and a shift in market perception—to truly compete with the US. Without these changes, the City of London may continue to struggle in the global financial race.
