Budget predictions / discussion

wmb194

HappyHarry said:

As shares and investment funds deal in the secondary market, encouraging people to invest in already listed UK companies doesn't actually benefit UK companies, it just changes the makeup of their shareholders.

It does through making London listed shares more liquid. More liquid usually means tighter spreads and should aid price discovery. A healthy secondary market is a prerequisite for a strong primary market, which includes IPOs and things like rights issues.

Millyonare

UK ISA will not make a jot of difference. Firms don't want to list in London because the culture among UK journalists, analysts and investors is downright hostile.

LHW99

If there is a gradual build up of UK investors holding UK ISAs long term, perhaps it would become more difficult for some of our better companies to be picked off by foreign companies - we can but hope as no Government seems bothered.

HappyHarry

wmb194 said:

HappyHarry said:

As shares and investment funds deal in the secondary market, encouraging people to invest in already listed UK companies doesn't actually benefit UK companies, it just changes the makeup of their shareholders.

It does through making London listed shares more liquid. More liquid usually means tighter spreads. A healthy secondary market is a prerequisite for a strong primary market, which includes IPOs and things like rights issues.

Fair point.

This would imply that the focus of the "Invest In Britain" concept would need to be on smaller UK companies, perhaps those on AIM, as the larger companies already have plenty of liquidity and small spreads. There would be little point in encouraging ISA holders and pension schemes to stock up on BP and HSBC shares.

This could lead to individuals and poorly managed pension schemes becoming overweight in UK smaller companies without fully understanding the risk of such an approach.

The government commenting on pension scheme allocations to UK shares should be a concern, as pension scheme trustees should be doing what is best for their members and not having asset allocations dictated by government. 

I can appreciate the desire for government to want businesses to list in the UK rather than overseas. However this approach smacks of government intervention which could be overturned in the future and so may not have the desired appeal to businesses considering a listing.

ColdIron

Money_Mad said:

SnowMan said:

Swipe said:

What's classed at British? Would be nice if I could add an extra £5K of FTSE Global All Cap to my ISA.

The consultation is here. There is clearly a lot of detail to sort out as to what UK means.

https://assets.publishing.service.gov.uk/media/65e734d62f2b3bd5107cd8c5/UK_ISA_Consultation.pdf

The intention is to include collective UK investments.

The UK ISA is clearly a gimmick that just adds serious complexity given that it will need to remain separate from other ISAs. If you read the document you will understand why it will be a real mess to set up and administer.

Those wanting to invest 25K in their ISA will simply allocate 5K to the UK ISA and put their non-UK element in a  normal ISA. So hard to see how it will increase investment in the UK.

That may be the case initially but over time if people continue to put £25k in, the proportion of UK stocks held will increase.

One of the complexities addressed in the consultation paper is transfers out of a BISA

• 3.7 To prevent people from using the new UK ISA allowance and transferring the balance immediately to another type of ISA, for example to a cash ISA, the government proposes that transfers from a UK ISA to another type of ISA will not be permitted.

Of course there is nothing preventing you from selling, say, CTY in your ISA and re-buying it in the UKISA, then adding new funds to your VWRL or whatever in the ISA

aroominyork

HappyHarry said:

wmb194 said:

HappyHarry said:

As shares and investment funds deal in the secondary market, encouraging people to invest in already listed UK companies doesn't actually benefit UK companies, it just changes the makeup of their shareholders.

It does through making London listed shares more liquid. More liquid usually means tighter spreads. A healthy secondary market is a prerequisite for a strong primary market, which includes IPOs and things like rights issues.

This would imply that the focus of the "Invest In Britain" concept would need to be on smaller UK companies, perhaps those on AIM, as the larger companies already have plenty of liquidity and small spreads. There would be little point in encouraging ISA holders and pension schemes to stock up on BP and HSBC shares.

They could make it any company not in the FTSE100 when bought, but differentiating funds would be trickier.