Retailers may have been slashing prices over the weekend to tempt bargain-hunting shoppers, but on the London Stock Exchange it’s been “Black Friday all year”, according to one of London’s top venture chiefs.
Tim Levene, the boss of listed fintech fund Augmentum, said that a lack of liquidity had weighed on valuations in the capital and faster reform was needed to correct the slide in UK PLC.
“[On the] London market it has been Black Friday, all year. In the investment trust sector, it’s 50 per cent off every day of this year,” he told City A.M.
“That’s what you should be buying. I really think that it’s cheap.”
London’s markets have a lot of “initiatives” underway to solve the structural issues in the market, but a “demand problem” and lack of liquidity was weighing on firms, Levene said.
“We’re not seeing the depth of liquidity coming in, and I think UK PLC generally has a lot of negativity towards the London market,” he added.
The comments point to a debate gripping the Square Mile this year over whether FTSE listed firms are trading at heavy discounts and struggling from a lack of capital in the market.
Augmentum revealed yesterday its net asset value per share, the value of its portfolio, had bumped up in value to £273.4m in the six months to September.
However, the company itself has a market capitalisation of just £156m.
Investors in London have faced a barrage of criticism over the past 12 months for so-called de-equitisation and a slide away from investing in listed FTSE firms.
Efforts are underway to try and boost the flow of cash coming into the market, with pressure being placed on pension funds by politicians and City figures to ramp up their holdings of domestic companies after a drop-off in equity holdings.
Fears have been fuelled by a flurry of take-private deals as some 33 firms look set to be picked off by private buyers this year, according to City A.M. analysis.
The overall number of trades on London’s public markets are down by more than a third, too.
The London Stock Exchange has hit back at the idea of a valuation gap however as it looks to bolster the reputation of the FTSE.
Group chief David Schwimmer told reporters this month that the idea of a gap between US and UK listed companies was a “myth”.
“If you look company by company and adjust for growth rates and other factors, funding is at and in some cases, higher in terms of valuation,” Schwimmer said.