What happens to the FTSE if the UK becomes Socialist?

Apodemus

Thrugelmir wrote: »

Plenty of UK companies are disappearing on a regular basis. Either taken private, acquired by private equity or overseas investors. The LSE has lost a third of it's entire listing in the past 15 years. Companies no longer need the markets to raise capital. Other sources are available.

You are of course correct about companies disappearing all the time - my own tiny holding in Inmarsat will most likely disappear in a few weeks time, taken private by a consortium of private equity investors and public sector pension funds.

The reason I posted the manifesto quotes was in response to the original question of what happens to the FTSE. These give an indication of a government (if elected) that would be interventionist in terms of the rules of listing on the LSE and on the functioning of companies (through the Companies Act). Depending on the individual’s political stance, this can be seen as a very good or very bad thing!

Apodemus

talexuser wrote: »

Why? are the rich getting so rich they can afford to buy companies outright? What does that leave us and our pension funds?

Some of the richest investors in the world are the big pension companies and for many years they have had a huge influence on capital movement. In the past, they were amongst the biggest investors in UK farmland and forestry. Unwinding this in the 80s had an influence on land values at the time. Nowadays they are amongst the bigger holders of retail property and development land in our towns and cities. As mentioned in my post above, the Inmarsat buy-out consortium involves two big Canadian pension funds. So if you are worried about collective pension funds, then I think they are big enough to be involved in the buy-out market and you need have no fears.

If, however, you are worried about your own self-invested pension fund, then you might have more cause for concern. To be argumentative, I would say that you should be especially concerned if it is all invested in stock market trackers and if increasing proportions of capital investment avoid the main stock market listed companies.

Of course, investing in funds that play in the unlisted market can be much more risky and requires greater trust in the decision-makers, as has been discovered by those hit by the Woodford debacle. Arguably, mistakes were made both by the investors who didn’t understand what they were buying into and also by Woodford in his choice of companies to take a stake in. But it doesn’t mean that the overall approach was wrong and many of the “wealth preservation” funds also hold proportions in non-listed companies. The trick is in getting the balance right!

John_Smith_2019

So can anyone explain (in simple terms) what happens to a UK shareholder if a company decides to move its listing from the LSE to the NYSE (for example)?

I own some large cap FTSE 100 companies (eg GSK) in my ISA.
I paid 0.5% stamp duty when I bought these shares.
What would happen if GSK moved its listing to the NYSE? Would I get my 0.5% stamp duty refunded?
Presumably my share holding would remain the same, but I would become subject to USA tax (in the same way as I would on a McDonald's share holding?

John_Smith_2019

Apodemus wrote: »

Some of the richest investors in the world are the big pension companies and for many years they have had a huge influence on capital movement. In the past, they were amongst the biggest investors in UK farmland and forestry. Unwinding this in the 80s had an influence on land values at the time. Nowadays they are amongst the bigger holders of retail property and development land in our towns and cities. As mentioned in my post above, the Inmarsat buy-out consortium involves two big Canadian pension funds. So if you are worried about collective pension funds, then I think they are big enough to be involved in the buy-out market and you need have no fears.

But it doesn’t mean that the overall approach was wrong and many of the “wealth preservation” funds also hold proportions in non-listed companies. The trick is in getting the balance right!

Interesting post.
Do you know why the large pension companies moved from farmland to commercial property?
Looking at the increase in farmland prices (between about 2010-2015) and the decline in the value of retail REITs (eg Hammerson, Intu etc) do you think (in hindsight) this was a good move by them?

Apodemus

John_Smith_2019 wrote: »

So can anyone explain (in simple terms) what happens to a UK shareholder if a company decides to move its listing from the LSE to the NYSE (for example)?

I own some large cap FTSE 100 companies (eg GSK) in my ISA.
I paid 0.5% stamp duty when I bought these shares.
What would happen if GSK moved its listing to the NYSE? Would I get my 0.5% stamp duty refunded?
Presumably my share holding would remain the same, but I would become subject to USA tax (in the same way as I would on a McDonald's share holding?

No you wouldn’t get your stamp duty refunded! No Government of any hue wants to give you money back! :rotfl:

Depending on the specific arrangements of the company and how you hold the shares, the processes would get much more complicated and expensive. For example, dividends might be issued only in The local currency and dealing in the shares might be difficult. Probably not a problem if you are talking about a big global entity like GSK simply relocating its listing (and HQ?) to NY. In my experience, it’s more of a problem when a smaller FT listed company moves to a smaller stock exchange - like Sidney or Johannesburg and issues dividends in Aus dollars or SA Rand - exchange costs and dealing costs can be disproportionate if the holding is small.

John_Smith_2019

Apodemus wrote: »

No you wouldn’t get your stamp duty refunded! No Government of any hue wants to give you money back! :rotfl:

Depending on the specific arrangements of the company and how you hold the shares, the processes would get much more complicated and expensive. For example, dividends might be issued only in The local currency and dealing in the shares might be difficult. Probably not a problem if you are talking about a big global entity like GSK simply relocating its listing (and HQ?) to NY. In my experience, it’s more of a problem when a smaller FT listed company moves to a smaller stock exchange - like Sidney or Johannesburg and issues dividends in Aus dollars or SA Rand - exchange costs and dealing costs can be disproportionate if the holding is small.

Yes, I'd forgotten about the whole FX fees problem with overseas shares.

I guess this is another advantage of funds / ITs over individual shares. Especially when it comes to the smaller companies.

John_Smith_2019

Apodemus wrote: »

No you wouldn’t get your stamp duty refunded! No Government of any hue wants to give you money back! :rotfl:
.

My reasoning would be that SD is not paid on US share purchases and that I agreed to pay the SD to avoid the hassle of foreign share ownership.
But like you say, I doubt the UK govt would care.

Apodemus

John_Smith_2019 wrote: »

Interesting post.
Do you know why the large pension companies moved from farmland to commercial property?
Looking at the increase in farmland prices (between about 2010-2015) and the decline in the value of retail REITs (eg Hammerson, Intu etc) do you think (in hindsight) this was a good move by them?

Remember that asset value is only part of the equation, the underlying assets are also productive, producing returns that vary with a wide variety of other issues. There can also be changes to tax regimes or Governmental support schemes which affect pension fund investment decisions. The mid 80s saw changes in agricultural support and farm-gate prices which reduced the attractiveness of farmland for institutional investors.

However, pension funds can also afford to take a longer view, and some apparently have significant holdings of green-belt farm land in the hope that political decisions on future house-building will unlock this for development. Which neatly brings us back on-track with the Labour Party manifesto...

John_Smith_2019

Apodemus wrote: »

Remember that asset value is only part of the equation, the underlying assets are also productive, producing returns that vary with a wide variety of other issues. There can also be changes to tax regimes or Governmental support schemes which affect pension fund investment decisions. The mid 80s saw changes in agricultural support and farm-gate prices which reduced the attractiveness of farmland for institutional investors.

However, pension funds can also afford to take a longer view, and some apparently have significant holdings of green-belt farm land in the hope that political decisions on future house-building will unlock this for development. Which neatly brings us back on-track with the Labour Party manifesto...

I'm guessing that would depend on what kind of price is offered for the land in the event of CPO by the govt.
It could be:
1. The agricultural value of the land.
2. The value of the land with planning permission.
3. Nothing.

John_Smith_2019

Apodemus wrote: »

Remember that asset value is only part of the equation, the underlying assets are also productive, producing returns that vary with a wide variety of other issues. There can also be changes to tax regimes or Governmental support schemes which affect pension fund investment decisions. The mid 80s saw changes in agricultural support and farm-gate prices which reduced the attractiveness of farmland for institutional investors.

However, pension funds can also afford to take a longer view, and some apparently have significant holdings of green-belt farm land in the hope that political decisions on future house-building will unlock this for development. Which neatly brings us back on-track with the Labour Party manifesto...

That's interesting what you say about farmland.
Because I've noticed that in the USA farmland (and timberland / forestry*) is more often mentioned in terms of investment and pensions etc, compared to the UK where I hardly see it mentioned.

The mainstream UK investment market seems to be mainly concerned with a balance of stocks and bonds.

*Not sure if there is a difference between timberland and forestry.