Why the UK equity market is shrinking

The crisis has been building for 25 years, says Max King, and it will take decades to reverse the trend.

London
(Image credit: © Getty Images)

The recent news that the total value of the UK stockmarket had fallen $250bn behind that of France came as a shock. The UK now comprises just 3.8% of the MSCI All Countries World index, a share likely to fall as more firms emigrate or are taken over. BHP Billiton and CRH have gone already; Unilever and Shell were bullied by investors into staying, but could change their minds, and others are under pressure to follow.

Simon French of Panmure Gordon calculates that even after adjusting for the lower-quality composition of the UK market (itself a telling characteristic), UK stocks trade on an 18% discount to comparators overseas. Bidders are thus queuing up to snap up bargains.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.