Following on yesterday's slightly whimsical "The mathematical formula that proves London is over" here's a more serious look at troubles in the City.
From The Telegraph via Yahoo Finance, December 1:
An economist at a leading City stockbroker has warned that London’s market is “structurally broken” as companies trade a fifth lower than overseas rivals.
Panmure Gordon’s chief economist Simon French said reduced investment in UK stocks had created a self-reinforcing “doom loop” that left them significantly undervalued.
French said the lack of attention given to the issue in the Autumn Statement meant the problem is unlikely to be fixed anytime soon.
A raft of new rules from Jeremy Hunt, the Chancellor, known as the Edinburgh reforms “implicitly acknowledge” the issue, said French, but he added they do not go far enough.
He said: “We have got ourselves into a funk and you need some pretty dramatic reforms. Because the UK market has underperformed for a long period of time, it has become, in my view, pretty self-fulfilling.
“The people investing your pension are saying it’s underperformed, therefore, we want to allocate less to it. You get in a bit of a doom loop.”
...MUCH MORE
The BBC warned this might happen.
