UK capital markets too dependent on foreign equity investors: Barclays

Investing.com — Barclays (LON:BARC) strategists, including Matthew Joyce, have highlighted that the UK capital markets are underperforming, largely due to an over-reliance on non-domestic equity investors. This dependency on foreign investors is viewed as a significant vulnerability.

The strategists suggest that boosting domestic demand could potentially mitigate this ongoing issue. They note that initial public offering (IPO) activity in the UK has been less robust compared to other regions, such as continental Europe and the United States.

The UK’s attractiveness as a listing destination appears to be diminishing, while the US is increasingly becoming the primary global capital market. The strategists express that this pattern is unlikely to change without some form of intervention.

The strategists also observed a structural decline in UK valuations. This is primarily due to the dwindling ownership by pension funds and insurance companies. The absence of these traditionally stable investors has contributed to the current state of the UK capital markets.