Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Merin
Speaker 1: Talks Money Weekly round up, our debrief on the biggest
Speaker 1: stories and markets and economics and a few other things too,
Speaker 1: because sometimes we get sidetracked. I'm Meren Sumsp, Web Editor
Speaker 1: at Large for Bloomberg UK Wealth.
Speaker 2: And I'm joined Stepics in your report and author of
Speaker 2: the Money Distilled newsletter.
Speaker 1: That is the second time in two years you've managed
Speaker 1: to read your own bit.
Speaker 3: And tell everyone who you are.
Speaker 2: I almost forgot it now, but.
Speaker 1: I think it's proof were anyone listening and saying that
Speaker 1: sometimes we're stuck in our ways so we don't have
Speaker 1: any ability to learn, and that kind of thing you
Speaker 1: live in proof that we have ability.
Speaker 2: To learn on this podcast, That's what I'd like to hear.
Speaker 1: Yes, so listen with confidence, everybody. Now, some of the
Speaker 1: things that we've been worried about for ages, they're really
Speaker 1: coming to fruition now.
Speaker 3: You know.
Speaker 1: One of our our sister newsletter, the London Rush, one
Speaker 1: of its headlines this week was the London Rush Oman
Speaker 1: leapfrogs London and it's all about have we just haven't
Speaker 1: got any IPOs here anymore?
Speaker 3: So Malaysia, Luxembourg as well as a one of.
Speaker 1: All raised more IPOs this year than here in London,
Speaker 1: which is now twentieth in the list.
Speaker 3: Of global listening venues.
Speaker 1: You know, and a few years ago we would have
Speaker 1: been in the top couple, well maybe top five or six,
Speaker 1: and twenty years ago.
Speaker 3: We would have been one or two.
Speaker 2: It's good.
Speaker 3: That's pretty miserable.
Speaker 1: And only this week we've seen another one of our
Speaker 1: big companies just go ashted, right you wrote about this.
Speaker 2: Yeah, Acetate is a too high a company and it's
Speaker 2: called Diestad because it started to do in Ashted and
Speaker 2: Sudy in England for American musters. But no, it is
Speaker 2: something like me. It's like ninety eight percent it's profit
Speaker 2: in the US. It's the second biggest to higher industrial
Speaker 2: equipment hired company out in the US called the sun Belt.
Speaker 2: And they've decided after I think they denied it maybe
Speaker 2: about a year ago, but they have been talking about
Speaker 2: it for a while and now they've decided that they're
Speaker 2: going to shift a primary listening to the US. They'll
Speaker 2: keep a secondary one here. But the point is it's
Speaker 2: like this is this is like the twenty fifth biggest
Speaker 2: company in the foots one hundred, so we're not talking
Speaker 2: about a little company here, and there's a lot of
Speaker 2: logic to the move. I think that's reasonable, we say,
Speaker 2: because obviously it's fundamentally it is now a US company
Speaker 2: with a UK subsidiary. And also they did experience a
Speaker 2: bit of pushback when they were looking to give the
Speaker 2: chief exec a bigger pay packet, and by American standards,
Speaker 2: you know, that's that won't happen when they go away,
Speaker 2: and I think that I think that's quite an important
Speaker 2: thing to remember, because they sort of mentioned that in passing,
Speaker 2: but they didn't go big on it. But when you
Speaker 2: think about it, the people who are making these decisions
Speaker 2: fundamentally are the management team, and you know, they're the
Speaker 2: ones who are not only seeing you know, the benefits
Speaker 2: the extra liquidity, the benefits of perhaps a higher valuation,
Speaker 2: which I think is debatable for this kind of company anyway,
Speaker 2: but also the benefit of a directly higher pay packet
Speaker 2: without getting criticism from the press, or criticism from proxy
Speaker 2: advisors or kind of feigned criticism from fund managers. So
Speaker 2: I think that's actually an issue that we really need
Speaker 2: to pay a bit more attention to. Whether you know
Speaker 2: whether we like it or not. I know there have
Speaker 2: certainly been times in the past whenever me and you
Speaker 2: have both questioned the size of CEO's pay packets. But
Speaker 2: I think maybe we've kind of or think maybe the
Speaker 2: atmosphere has swung too much in the opposite direction, because
Speaker 2: it's definitely a big factor whenever people are choosing where
Speaker 2: they're going to list.
Speaker 1: Yeah, now I get that. I mean, I I see
Speaker 1: why companies want to move. They move to deeper, more
Speaker 1: liquid markets, markets that investors are more a market should
Speaker 1: I say that investors are much more interested in one
Speaker 1: where they know they can get a much higher evaluation
Speaker 1: and also one where they know they can be paid more.
Speaker 3: And you and I, you know, we're pragmatic.
Speaker 1: We thoroughly disapprove of people being paid enough to, as
Speaker 1: we always say, transform the fortunes of their family for
Speaker 1: many generations, purely for stepping into running company that somebody
Speaker 1: else started and somebody else innovated into greatness.
Speaker 3: And we don't approve of that.
Speaker 1: But we also we'd take that any day over the
Speaker 1: collapse of our own equity markets, wouldn't we? Yeah?
Speaker 2: Absolutely? I mean I think the other issue and I
Speaker 2: guess this leads we're going to talk about. But there's
Speaker 2: a couple of things you've got If a did can
Speaker 2: make the argument that is basically a US business with
Speaker 2: you know what kind of UK unit, No, the promise
Speaker 2: is a lot other see one hundred companies that could
Speaker 2: basically make the same argument. Yeah, that's something closer ties
Speaker 2: to UK. But one that one of the guys that
Speaker 2: follow on Twitter was mentioning to me yesterday was like
Speaker 2: Pearson for example. So Pearson's sort of changed itself from
Speaker 2: being a kind of slightly you know, stuck in the
Speaker 2: MUD's educational publisher and obviously went through an awful lot
Speaker 2: of problems in that transformation, but now it's sort of
Speaker 2: a digital education company and it does make something like
Speaker 2: seventy percent of his money in North America, and you know,
Speaker 2: I think you could make a strong argument that it
Speaker 2: would fetch a higher multiple in the US because it
Speaker 2: is a kind of techy company relative to what it
Speaker 2: might fetch in the UK. So that you know, and
Speaker 2: that's just one example. So if they all sort of
Speaker 2: start to think the same way, then you know, we
Speaker 2: are kind of in trouble because the pipeline and this
Speaker 2: is I mean, this is the fundamental problem, the fundamental promise.
Speaker 2: The pipeline isn't getting refilled. A UK company makes it
Speaker 2: big in America, that's a good thing. If it then
Speaker 2: chooses to go and listen in because most of its
Speaker 2: management team and employees are there, then you know, fear enough.
Speaker 2: But we need to have more companies coming through at
Speaker 2: the bottom end to replace them, and we just don't,
Speaker 2: you know, we don't.
Speaker 1: Yeah, So we're losing companies to listing abroad, but we're
Speaker 1: also losing this forget what we've talked about a lot
Speaker 1: on this podcast. We're losing companies to the private markets relentlessly,
Speaker 1: some some just merging, some mem and a of course,
Speaker 1: but also that are leaving the market all together. And
Speaker 1: that just comes and comes and comes, and the number
Speaker 1: of stocks on the UK market just falls and falls.
Speaker 3: And I just had one.
Speaker 1: You know how, sometimes John, when we talk about the NHS, Yes,
Speaker 1: we always say where is the CEO?
Speaker 3: Why is she never out there? Why is you never
Speaker 3: hear on the radio, never hear.
Speaker 1: Her on the teally explaining how she managed to make
Speaker 1: such a MESSI of the whole thing, right.
Speaker 3: Just not there, just not there.
Speaker 1: We have to listen to, you know, various government ministers
Speaker 1: who have any limited control over this vast organization, or
Speaker 1: people from groups outside the NHS, but we very rarely
Speaker 1: hear from the person actually in charge. And it makes
Speaker 1: me really irritated because anyone doing a lousy job should
Speaker 1: be called out.
Speaker 3: For that publicly, right, Yes.
Speaker 1: And the other person when I'm looking at this is
Speaker 1: I'm thinking, well, I want to check who is the
Speaker 1: CEO of the London Stock Exchange, you know, And here
Speaker 1: she is, Julia Hoggan, and I'm sure she's very nice
Speaker 1: and all that, but I don't hear her voice out
Speaker 1: there publicly fighting for the Stock Exchange, fighting for our
Speaker 1: ecoity markets.
Speaker 2: I mean, I think that's a fat point.
Speaker 1: Oh good, good, good, because I suddenly felt, God, Mary,
Speaker 1: you're being really mean here.
Speaker 3: Stop this. But actually, I you know this.
Speaker 1: The Stock Exchange is such an important part of the
Speaker 1: UK's financial ecosystem. I mean, it's absolutely vital. This is
Speaker 1: as vital to the continuation of the UK as the NHS,
Speaker 1: possibly more so. Why aren't we hearing her voice? I mean,
Speaker 1: maybe there's lots going on behind the scenes. I don't know,
Speaker 1: but if there is a lot going on, behind the scenes,
Speaker 1: it's not going very well, is it.
Speaker 2: I think you're read in terms of the visibility, because
Speaker 2: I mean the people I eat into your most a
Speaker 2: bit less topic of the like, you know, the guys
Speaker 2: that people hunt, the sorts of people talking about, you know,
Speaker 2: people who have broke us to smaller companies. I think
Speaker 2: what you normally hear is that the IPO pipeline is
Speaker 2: looking healthy. Well whats to that? On mutter links to
Speaker 2: that effect, But I have to see that looking at
Speaker 2: the statistics, it's like it's one of these things like, oh,
Speaker 2: it's all going to get better than six months time,
Speaker 2: and then six months comes and goes and nothing's happened.
Speaker 2: So no, I mean, I think this is a big
Speaker 2: issue and that more campaign and from that front would
Speaker 2: probably be helpful.
Speaker 1: Oh maybe more obvious campaigning.
Speaker 3: Anyway.
Speaker 1: The other thing that we should talk about is these
Speaker 1: companies going private and what that means, not just in
Speaker 1: the UK but in the US and our colic John
Speaker 1: Authis is written about that this morning.
Speaker 3: Rather go just leave here writes about everything.
Speaker 2: Rather well, yes, yes he does. I feel a stab
Speaker 2: of professional jealousy reading this particular one, But you don't.
Speaker 3: We've written all this stuff too.
Speaker 1: We've been talking about, you know, pensions having been forced
Speaker 1: into private et cetera.
Speaker 3: For ages.
Speaker 2: There's a very good start in the Low I don't
Speaker 2: know if you saw. There's a wee chart in it,
Speaker 2: and this is basically the piece. It's all about why
Speaker 2: pensions going into private companies rather than public companies. And
Speaker 2: the basic point is that, well, the number of public
Speaker 2: companies has actually created well, the number of private companies
Speaker 2: is rocketed, but I hadn't realized the extent it's. In
Speaker 2: two thousand, the number of US public companies listed companies
Speaker 2: was about seven thousand. The number of private companies was
Speaker 2: two thousand, and this is accordinated some research by a
Speaker 2: Munday and pitchbook can create research. And in twenty twenty one,
Speaker 2: the number of listed companies it's four thousand, eight hundred
Speaker 2: and five, so you know, it's dropped by what about
Speaker 2: a third more than a third, And the number of
Speaker 2: private companies is nine nine hundred and fifty eight, so
Speaker 2: it's almost five times as many as they were in
Speaker 2: two thousand. And you look at that and you're kind
Speaker 2: of like, well, okay, no wonder you know, the kind
Speaker 2: of appetite for private markets has gone up. That's where
Speaker 2: all the companies are now.
Speaker 1: Yeah, I mean, the one thing that we should say
Speaker 1: about that is that, I mean, I don't know if
Speaker 1: the numbers were in this article.
Speaker 3: You read it more heavily than I did.
Speaker 1: But it's also true that the listed companies tend still
Speaker 1: to be bigger. So the overall value of the lifted
Speaker 1: markets is still very significantly higher than the overall value
Speaker 1: of the private markets. Is that fair?
Speaker 2: Yees? So the value is still higher. But what is
Speaker 2: also interesting is that I'm trying to what this properly
Speaker 2: because this Andrew apthor On at Sockchain, who always does
Speaker 2: a lot of interest in sort of stuff on this Yeah,
Speaker 2: basically points out the ratio is stock market's total market
Speaker 2: cup to the price has basically been flat for about
Speaker 2: twenty years. So basically what he's saying is the evaluations
Speaker 2: are going up rather than the size of the market.
Speaker 3: Yeah.
Speaker 2: Yeah, that's been in process for ABD twenty, isn't it.
Speaker 2: And that's obviously to do with de equitization, and it's
Speaker 2: more pronounced than the US, but it's you know, it's
Speaker 2: happening in Europe as well, and the and yeah, I mean,
Speaker 2: it's just, well, we know the reasons are. The reasons
Speaker 2: are primarily because of the low interest rate era making
Speaker 2: it easier to swap kind of shares for debt. Basically,
Speaker 2: de equitizations are problem everywhere, and I think that it
Speaker 2: is worth looking at the issues in the UK specifically
Speaker 2: in that context. I do think the UK could be
Speaker 2: doing a much better job of getting its share of
Speaker 2: that decreasing pie, if you like. But at the same time,
Speaker 2: I think it is worth flagging up that it's not
Speaker 2: a UK only issue. And one of the reasons we
Speaker 2: feel it more is because we used to be the
Speaker 2: top financial market alongside New York and now that's just
Speaker 2: not the case anymore.
Speaker 3: Yeah.
Speaker 1: But the other thing I would say is that this
Speaker 1: this should be reversible. I mean, John quote one of
Speaker 1: the attention upon executive speaking to the Amundi researchers who
Speaker 1: wrote this report, and if you look at the list
Speaker 1: of things that they list of reasons they give for
Speaker 1: not wanting to be listed, and these are all things John,
Speaker 1: that you and.
Speaker 3: I have talked about on this podcast before.
Speaker 1: Don't know many times how many times, but here they
Speaker 1: are growing investors. Short term is bureaucratic listing requirements and
Speaker 1: excessive regulatory scrutiny.
Speaker 3: These have been augmented.
Speaker 1: Lately by the share buy backboon that enhances earning perst share,
Speaker 1: the contracting pipeline of IPOs. It means that fewer growth
Speaker 1: companies are seeking listing and the cheap availability of capital
Speaker 1: elsewhere's interest rates plunged in the last decade. There are
Speaker 1: few public companies now that we're forty years ago. They
Speaker 1: are on average much larger and older. We know all that,
Speaker 1: but if you look at the list of reasons why
Speaker 1: people don't want to list companies.
Speaker 3: These are reversible.
Speaker 1: You know. There are lots of ways to make investors
Speaker 1: less short term. There's lots of ways to change the
Speaker 1: listing requirements to make it less bureaucratic, make it less onerous,
Speaker 1: make it less expensive, make people more willing to be
Speaker 1: directed on listed companies, et cetera. There are lots of
Speaker 1: things that can be done here. I mean, I don't
Speaker 1: want to come over the stamp duty argument again, but
Speaker 1: listeners go back and look at what John and I
Speaker 1: have written and spoken about when it comes to stamp
Speaker 1: duty on UK equities on another thing out there.
Speaker 3: So all this is reversible.
Speaker 1: Are you listening, Julia, So it seems to me that
Speaker 1: I don't understand why we're not working harder and faster
Speaker 1: on this. I'm constantly hearing about all the conversations that
Speaker 1: are going on behind the scenes to try and make
Speaker 1: the UK a better place to list and a better
Speaker 1: place to be a listed company, But I don't see
Speaker 1: any progress, and I simply don't understand it. Given the
Speaker 1: importance of our acculty market to our entire infrastructure, as
Speaker 1: I keep saying, why would you not find a way
Speaker 1: to support it, Why would you not find a way
Speaker 1: to help it grow?
Speaker 3: Mysteries, John, mysteries?
Speaker 2: I mean the incentives that all stacked in the Lorong
Speaker 2: direction is that genuinely think it's that simple. We've got
Speaker 2: a culture safetyism, and the safetyism comes about from the
Speaker 2: fact that all the regulators and all of the politicians
Speaker 2: would rather be told off mildly for having two weak
Speaker 2: growth than be told off aggressively for something blowing up
Speaker 2: at some point in the future. And that that's literally it.
Speaker 2: And it's been like that since two thousand and eight
Speaker 2: for obvious reasons, and it's only got worse. So it's
Speaker 2: just we have a very compliance heavy world, and I
Speaker 2: mean we had plenty of box ticking before two thousand
Speaker 2: and eight. I mean, I think anyone who talks about
Speaker 2: light touch regulation that's kind of just you know, away
Speaker 2: with the fairies. But the point is the overall attitude
Speaker 2: has changed, and so it's nobody the people who can
Speaker 2: allow this to happen don't see any real benefit from
Speaker 2: allowing more risk tas taking a more risk taking culture.
Speaker 2: And I think that's a major problem, and I think
Speaker 2: that's probably only going to change with politics. Actually we
Speaker 2: need something that's more can to can the Trump mosque
Speaker 2: merely shift that.
Speaker 3: Makes complete sense.
Speaker 1: But if that's the case, you know, there's four more
Speaker 1: years of this, more more years, more than four more years,
Speaker 1: Well we just have to say and watch our stop
Speaker 1: markets slowly die. And with it, you know, there goes
Speaker 1: shareholder democracy. They're going to shaholder capitalism. There goes the
Speaker 1: way that that we think that ordinary people can be
Speaker 1: pulled into supporting markets and supporting capitalism because of their
Speaker 1: participation in those markets. Those markets go. So does that
Speaker 1: rather nice theory? Read my book on the matter.
Speaker 2: Yeah, it's very good.
Speaker 1: Yeah, So you know, there's so much to worry about it,
Speaker 1: but we will watch it.
Speaker 3: We will hope for progress. Julia call us.
Speaker 1: If you have any thoughts on this, or perhaps if
Speaker 1: you're doing anything, we'd love to hear about it before
Speaker 1: we go. I just want to talk about one other
Speaker 1: piece of misery. One of the platforms is sent round
Speaker 1: a a few calculations on how much all our taxes
Speaker 1: are going to go up in twenty twenty five. Tax
Speaker 1: burden is set to rise by one thy two hundred
Speaker 1: and sixty one pounds for mid learners and three eight
Speaker 1: hundred and thirty six pounds for those on one hundred
Speaker 1: thousand pounds in twenty twenty five due to a triple
Speaker 1: wormy of tax changes. And so they've looked at let's
Speaker 1: look at the bottom one someone earning this is Interactive Investor,
Speaker 1: by the way, showing that someone earning an annual salary
Speaker 1: of thirty five thousand pounds, who also realizes a ten
Speaker 1: thousand pounds capital game and receives two thousand pounds in
Speaker 1: dividends in twenty twenty five, will pay one two hundred
Speaker 1: and sixty one pounds more.
Speaker 3: So you know it's quite a lot of money.
Speaker 2: Yeah, I mean would I mean it's it's a good
Speaker 2: reason to make sure that you're using your annual allowances
Speaker 2: and trying to make sure that you don't have any
Speaker 2: capital gains exposed.
Speaker 1: There's literally nothing I can say on this podcast that
Speaker 1: doesn't bring you back to advising people to use their allowances.
Speaker 2: Is that well gain No, it says the it's the
Speaker 2: it's the stereotypical financial advice, but it's also about the
Speaker 2: only thing that you can do.
Speaker 3: It's also up.
Speaker 1: I mean, it is the best advice. Could you your
Speaker 1: sixty grand a pension, You've got your twenty grand of ISA,
Speaker 1: if you're married in a simple partnership, you've got both of.
Speaker 3: Those things, right.
Speaker 2: Yeah.
Speaker 1: Anyway, this is a good reason, by the way, everyone
Speaker 1: to go back and listen to our podcast from earlier
Speaker 1: in the week about why to get married, because again
Speaker 1: there's a list underneath a spreadsheet from the platform about
Speaker 1: all the ways that you can try and cut this liability,
Speaker 1: and one of them is you get at.
Speaker 3: The marriage allowance.
Speaker 1: Yes, yes, go back and listen to our podcast earlier
Speaker 1: in the week, and for heaven's sake, get married anything
Speaker 1: to save tax.
Speaker 2: Right, yeah, absolutely, just go out there, faint somebody.
Speaker 1: It's easy, yeah, anyone, and then if exactly, your happiness
Speaker 1: will go up as well. Remember all those studies we
Speaker 1: talk about those earlier in the week. Two get married,
Speaker 1: be happy.
Speaker 2: Or you know, maybe not, make sure it's the one.
Speaker 3: Yeah, nothing is simple. Nothing is simple.
Speaker 1: Thanks for listening to this week's Maren Talks Money debrief.
Speaker 1: If you like our show, rate review, and subscribe wherever
Speaker 1: you listen to podcasts. Also be sure to follow me
Speaker 1: in John on x or Twitter at marins w and
Speaker 1: John Underscore steppec.
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