Ian Harnett in Bloomberg Opinion: ‘Problem With UK’s New Retirement Plan Is UK Stocks’
08th MAR. 2024
In Bloomberg's recent News piece, Ian Harnett discusses the small companies sector. John Authers references Absolute Strategy Research, illustrating three graphs showing the performance of UK vs US Equity Markets, UK Market Cap As a % of Global Equities & UK Small Cap as a % of Total UK All Share Market Cap.
"As this chart from Absolute Strategy Research shows, the UK’s underperformance of US share prices has been bang in line with underperforming profit growth.
This becomes a vicious cycle as the UK represents an ever smaller share of total global market cap, making big allocations to it harder to justify. Absolute Strategy shows that the UK still made up as much as 11% of global equities 20 years ago. Now, thanks in part to the fall of the pound, it’s below 4%.
The small companies sector, despite much-ballyhooed projects to build it up, has dwindled to what Absolute Strategy’s Ian Harnett calls an irrelevance. Institutions need to take huge stakes in them to make any difference to their overall performance. This dynamic impedes capital from staying in the country, and particularly from going to the kind of growing companies that might most buoy the economy."
