Disruption seems like too small a word to describe the scale of the upheaval and disquiet felt by the international capital markets and global business community following the first one hundred and however many more days since President Trump took office for the second time. Disruption is what happens to my work commute when a train is cancelled or my holiday plans because my child develops a fever the day before our departure.
What we are experiencing is more akin to a devastating tornado. President Trump isn’t just moving fast and breaking things, he is sweeping-up the infrastructure that has underpinned international trade and commerce for decades, intentionally smashing those rules that don’t suit him and changing the landscape into something that is unrecognisable.
Who knew? The disruptive reality of Tornado Trump is far more destructive than anyone outside of his inner-circle could have possibly predicted.
The world is not only reeling from the impact of unilateral tariffs against China, Mexico and Canada, as well as a few selected industries such as steel and cars (which resulted in heavy losses on the US markets), but new tariffs against every other country with which the US trades. The looming prospect of a global trade war is damaging economies and undermining business confidence world-wide. Siding with Russia in votes at the United Nations; pronouncements such as, ambitions to annex Canada and purchase Greenland; and hints that he will seek an unprecedented third term in power, are destabilising international relationships and causing unpredictable volatility in markets on an almost daily basis.
Tapping our heels together and whispering “There’s no place like home”, won’t wake us from what is a nightmare for many and the new American Dream for some. Companies are just going to have to accept that turmoil is the new normal and get on with it.
The usual approach when faced with risky and difficult market conditions is to do nothing, but the strategy of sitting-tight has run out of road. After years of waiting for markets and economies to turn a corner following first the Covid pandemic and then UK political uncertainty coupled with the high inflation and low growth economy that followed, many funds, investors, and companies, have reached a crux point and need to act. The fact is that companies can’t do anything for the next five years (or potentially even longer) until the Trump term in office comes to an end.
The ‘good’ news for the UK markets is that the lustre of the US as a destination for IPOs, secondary listings or switches has dimmed. US capital markets are suffering the most as a result of the President’s unpredictability – not even its lauded tech stocks are immune from the market’s flinches – and the US’s reputation as a stable jurisdiction has been somewhat diminished.
This change in reality coincides with a growing awareness that actually, the US market wasn’t all it was cracked-up to be anyway. Recent articles in the media have highlighted that smaller UK companies that floated in the US haven’t fared as well in the Big Smoke as they might have thought; that only a handful of UK companies that listed in the US have increased their valuations with the majority seeing a share price fall or even delisting; and that liquidity is on a par when viewed relative to market size.
The Times has reported that Nasdaq and the NYSE have stepped up their efforts to court UK companies with dazzling offers of support to entice them to list in the US. However, despite these maneuvers, CK Hutchison is (allegedly) planning to list a spin-off on the LSE, ClearScore has indicated that it, too, would prefer to list in London, as has Ebury (although not imminently). Anecdotally at market events and among professional advisors, there appears to be quite a bit of life bubbling beneath the surface, a surprising positivity and an appetite for AIM transactions. Some green shoots appear to be poking through the manure.
The Government should take advantage of this swing away from the US to get the UK markets moving again by cementing London’s position as the first choice for a safe-haven operating environment and attractive growth market. Changes to AIM listing rules to cut bureaucracy and ease the regulatory burden on companies are already in the pipeline and the mood music around the future balance between regulation and promoting growth sounds good. But we should put action to the words of the Chancellor’s favourite phrase, and go much further and much faster.
For example, it is astonishing to me that Sweden’s capital market has greater liquidity than London relative to its size. A key reason for this is Sweden’s investment culture which spans retail as well as institutional investors. Looking forward to the next Budget, eliminating the stamp duty on buying shares and/or reducing the tax on share sales and enabling people to invest part of their pensions savings in shares, would be good ways to encourage a similar investment culture in the UK.
London won’t be able to escape the volatility created by announcements from the White House over the next months and years, but it will have the advantage of being less volatile (particularly if the UK can swerve the worst of the US tariffs). It can also become an even more attractive proposition with some additional tax encouragement and further reductions in reporting and regulatory requirements for smaller cap listed companies. Carpe Diem Rachel!
This article was originally published in the April 2025 AIM Advisers Rankings Guide. For more information, please contact Joseph Archer.
