Something strange is happening to London’s equity market. In a word, it is shrinking. Steadily, but surely, and over a long period of time. This threatens to have long-term financial and economic consequences for all of us.
This may surprise you since on the face of it everything looks rosy. The FTSE 100 is sitting at over 7,400, not far off its all-time high of 7,547, which it reached in May. Equity funds and investors have been making a killing in recent years – the index has more than doubled since its low point in the financial crisis in 2009. This is against a backdrop of near-zero interest rates for all that time.
Look behind the numbers and a far more troubling picture emerges. The high point for the main market of the London Stock Exchange was not three months ago but 17 years ago – in terms of total market capitalisation. This is surely the best measure of the power and strength of a capital market, rather than the rather subjective and self-selective measurement of an index.
To continue reading please follow this link to the original article on the City AM website: http://www.cityam.com/270947/london-stock-exchange-shrinking-why-capital-needs-float
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