Investors shift from US shares revive London market optimism

Investors have begun cutting their exposure to American equities and are rediscovering appetite for the previously overlooked British market, according to the London Stock Exchange Group. Recent shifts in investment flows are reversing a decade-long trend which left London out of favour with global investors, particularly following the UK’s Brexit referendum in 2016 and years of subsequent political uncertainty.

David Schwimmer, chief executive of LSEG, noted that the past several months have seen growing movement out of US assets and into both continental Europe and the UK. While not directly attributing the shifts to US policy, Schwimmer acknowledged that market volatility—including the impact of new tariffs imposed by President Trump earlier this year, which caused a marked drop in the US dollar—has prompted many fund managers to rethink their concentrated positions in the United States.

Schroders chief executive Richard Oldfield commented on Thursday that investors are increasingly seeking resilience in their portfolios, leading to a natural diversification away from a US-centric exposure. British fund manager Jupiter echoed this sentiment, citing the early effects of US trade policy as motivation for reallocating assets towards the UK and Europe.

The decade prior saw London-listed companies undervalued as capital fled Britain, leaving many vulnerable to cheap takeover bids. Over the same period, US assets outperformed, fuelling the notion of American exceptionalism. The reversal, driven by geopolitical and economic uncertainty in the US, has renewed interest in London equities and helped boost activity on the exchange.

Financial results for LSEG have reflected this shift. The group reported a 43 per cent rise in pre-tax profits for the first half of the year, far outstripping analyst expectations. LSEG has now announced it will return up to £1 billion to shareholders through further buybacks, along with a 14.6 per cent interim dividend increase. Despite these positive results, shares in LSEG dropped nearly 8 per cent on concerns over slowing subscription income in core data and analytics units.

LSEG, now a major financial data provider following its acquisition of Refinitiv, continues to see the exchange as a core business. Although the UK market faces the ongoing challenge of dwindling new listings and some large companies moving to New York, Schwimmer defended LSEG’s commitment to London. He cited ongoing reforms to listing rules and significant investment to attract new entrants and support existing companies, as well as possible plans to introduce 24-hour trading to boost competitiveness.

Market participants and regulators are keeping a close eye on London’s ability to attract and retain listings in an increasingly globalised investment landscape. As geopolitical events prompt investors to reconsider their strategies, the fortunes of the London market may well continue their revival.