How Britain Broke Its Own Stock Market
This week, Google raised $32 billion in debt in under 24 hours — including a billion-pound, 100-year sterling bond that was nearly ten times oversubscribed. The main buyers? UK pension funds and insurance companies.
The same institutions that have almost entirely abandoned British equities are now queuing up to fund Google's AI ambitions for the next century. In the same week, the London Stock Exchange itself became an activist investor target, its shares down 35%, barely functioning as an exchange at all.
In this episode, Neil and Jon trace the three regulatory decisions over 25 years that systematically broke the UK equity market — from pension accounting rules that forced the biggest owners to sell, to MiFID 2 destroying the research ecosystem that kept smaller companies alive, to the Brexit confidence shock that drove international investors out.
The numbers are stark. UK pension funds owned 32% of the market in 1992. Today: 1.5%. London accounted for 18% of global IPOs at its peak. Today: effectively zero. The market has lost 44% of its listed companies. More money now leaves through dividends and buybacks than arrives through capital raising.
But here's where it gets interesting. Neil argues that this two-decade wrecking ball has created a generational valuation opportunity. UK equities trade at 10-11x earnings against a US market at 25x. The historical relationship between starting valuations and subsequent returns — which holds with 75% accuracy over 50 years — predicts low double-digit annual returns from the UK over the next decade. The same relationship predicts the S&P 500 delivers pretty much zero.
Neil's articles referenced in this episode:
🔗 A Quarter Century of Damaging Reforms
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