This year, 88 companies delisted or transferred their primary listing away from the London Stock Exchange. Only 18 new companies listed. This, according to FT, marks the biggest net outflow of companies since the financial crisis.
A lot of these companies are, of course, moving their listings over to the US. The New York Stock Exchange and the Nasdaq are, by far, the two largest stock exchanges in the world by market cap. And so many companies believe that they'll generally have a better time being listed over there -- better access to capital, greater liquidity, etc.
This is not a new trend. Last year, the FT also called out the London Stock Exchange as being the European stock exchange with the greatest risk of seeing companies depart for the US. Here's what's been happening since the financial crisis:
Some people may not think that this is a big deal, but it certainly undermines London's position as a pre-eminent global center. Most rankings of the world's best or most global cities have London and New York out front. But from an economic prosperity standpoint, the US hegemony is real and feels even stronger right now.
Naturally, this decline will also trickle through other parts of the economy. On the real estate side, prime central London is seeing the biggest buyer's market since the financial crisis. (Presumably this is true of other submarkets as well.) On the new construction side, sales and starts are falling, and unsold homes sitting as developer inventory are increasing:
It is tempting to say that London will always be London. But:
“The UK market does not have any god-given right to be a leading listing venue, [but] it requires nurturing and support to be successful in a market that is increasingly global,” said Hall, adding that “more companies will depart” unless action is taken.
This is true of every city and every industry. There are no guarantees. Cities need to compete, just as companies compete. I am also of the opinion that Brexit has and will continue to be a drag on the UK economy. Disclaimer: I'm not an economist. But the UK is a relatively small country. So intuitively, I would think that the way to compete with the scale and dominance of the US is through a more unified Europe.
Are you bullish or bearish on London right now?
There are countless rankings of cities out there. And most of them probably don't mean very much. But the concept of a "global city", as coined by Saskia Sassen in the early 90s, is still immensely fascinating to me. And that's because there is, in fact, an order. There are cities that are less and more important to the global economy.
To this end, Resonance Consulting has just released their annual ranking of the world's best cities. And this year, they've introduced something new to their methodology: perception data. For this, they partnered with Ipsos and asked more than 22,000 respondents across 30 countries the following three broad and open-ended questions:
What are the top 3 towns or cities you would most like to live in someday?
What are the top 3 towns or cities you would most like to visit in the next 12 to 24 months?
What 3 towns or cities do you believe currently offer the best job opportunities?
The intent with these questions was to not anchor people to a specific list of places, and to not necessarily anchor people to big global cities. Maybe the best job opportunities are believed to be in small towns that most people aren't thinking about. The result is that thousands of different towns and cities were mentioned during the survey period.
While this didn't necessarily impact the cities and usual suspects that you would expect to see in a ranking like this -- cities like London, New York, and Paris -- it did change certain things and offer some interesting insights. For example, the strong global perception of Sydney helped to move it into the top 10 for the first in the ten-year history of this report.
On the other end of the spectrum, negative sentiment (outside of China) toward Hong Kong caused the city's ranking to drop precipitously. It is now ranked 97th, behind cities like Naples (Italy), Birmingham (UK), and Rochester (US). Singapore, in case you're wondering, is ranked 5th:
Broadly speaking, the perception data also served to remind us that we continue to have a bias toward cities. When people are asked where they want to live, visit, and work, they still think of the world's biggest and most important places. So despite the rise of decentralizing technologies (i.e. Zoom) and the bad things that happened to cities as a result of the pandemic, big cities remain at the center of the global economy.
This is not at all surprising.
Cover photo by Aaron Gilmore on Unsplash
In 2019, London implemented something known as an Ultra-Low Emission Zone (or ULEZ). The intent was to reduce the number of older and higher-polluting vehicles entering and driving around the city.
It works like this: If you have a vehicle that does not meet the ULEZ emission standards, you need to pay a daily charge of £12.50. This applies all day every day (except Christmas) and it is in addition to London's congestion charge.
It's also done entirely through license plate cameras. If you enter the zone, don't have an approved plate, and don't pay the charge within a few days, you get sent a fine. The result is that London's ULEZ is now the largest clean air zone in the world (at least according to London).
It also achieved its intended purpose. In 2017, only 39% of cars entering London would have met the ULEZ emission standards. Today the number is over 95%. Meaning, most people don't actually pay the charge.
At the same time, nitrogen dioxide levels in the zone have more than halved, improving overall health outcomes. It's a perfect example of taxing the things you want less of. What's also interesting is that there were positive second-order consequences.
Vehicle traffic as a whole declined by about 9% in the first year, with no evidence of displacement to other areas. And according to this research study, it actually encouraged more kids to walk and take other forms of "active transport" to and from school.
Seems like a no brainer to me.