UK Listed Firms Flock to US Pink Sheet Market for Greater Exposure and Higher Valuations

Persistent valuation discounts on the London markets are pushing an increasing number of UK listed companies towards the United States, specifically to cross trade on the less familiar ‘pink sheet’ exchange. More than three quarters of the FTSE 100, along with much of the FTSE 250, are now trading on OTC Markets – an American financial group known for owning the so called pink sheets, where thousands of speculative stocks are dealt by US investors.

OTC Markets provides not only the pink sheets for over the counter trading of smaller or unlisted companies, but also operates a higher tier for global blue chip stocks. This broader appeal allows FTSE 350 companies to attract a new pool of US retail and institutional investors. Significant names like London Stock Exchange Group and Reckitt Benckiser have joined OTC Markets in recent months, with notable entries from the FTSE 250 including Pinewood Technologies and Spectris this year alone.

The phenomenon is driven by the growing belief that UK stocks trade at a discount compared to international peers. Jason Paltrowitz, executive vice-president at OTC Markets, has indicated that US investor interest is growing in UK and European stocks due to the relative undervaluation when set against their American equivalents. US markets have become highly concentrated, with the top ten S and P 500 stocks representing a substantial share of overall market capitalisation, much of which is clustered in large technology firms. This has prompted American investors to look further afield to diversify away from a frothy tech sector.

Volume tells the story: in the first three quarters of this year, trading volumes in UK shares on OTC Markets soared to 56 billion US dollars, marking a year on year rise of 71 per cent. Foreign companies trading on OTC Markets can use their home market rules and reporting requirements, provided disclosures are made promptly and in English. Crucially, companies are not obliged to abandon their primary London listing—meaning the process is far less onerous than seeking a full listing on the New York Stock Exchange or Nasdaq.

Cross trading for international exposure is not new. Iconic brands like Roche Holdings, Tate and Lyle, and Adidas were among early adopters back in 2007. Defence companies and oil majors from Europe have seen especially strong interest of late, with German firms such as Rheinmetall notable among the most actively traded stocks on the platform.

Retail investors have also gained influence in recent years. Where once multinationals shunned US retail shareholders, now the American individual investor represents the largest institutional force globally, bringing a new dimension to capital raising and share liquidity for UK corporates seeking to bridge the Atlantic valuation gulf.