Market update: Footsie hits record amid Schroders’ takeover, shrugging off weak UK growth
Susannah Streeter, chief investment strategist, Wealth Club: “The Footsie has scaled fresh heights, as demand for London-listed assets intensifies. The mega takeover of Schroders by US institutional investor Nuveen demonstrates how overseas players are sniffing out untapped value in UK companies. The acquisition will create an asset management behemoth and, thanks to the decision to locate the merged company in London, adds shine to the City’s reputation as a leader in global asset and wealth management.
However, with yet another big name turning private, it will be a blow to the London Stock Exchange. With global whales swallowing big fish in the UK pond, it limits the availability of listed assets for funds. This is partly why private market opportunities are increasingly attractive, given that opportunities to invest in listed companies are declining.
This will go down as a week of huge upheaval for the UK asset management landscape, with this mega deal arriving just as valuations had taken a hit over worries about AI disruption. This takeover demonstrates the allure UK assets hold and has helped boost shares in other wealth managers and banks. There’s also been a fair amount of bargain hunting after yesterday’s dramatic falls.
A reassuring update from RELX, which was hit by the sell-off on Tuesday, has helped sentiment. The global analytics provider saw operating profit rise 9% and said its integration of AI tools across its business would be a big driver going forward, shaking off worries about disruptors eating into its revenues.
Given its international focus, the Footsie’s performance appears increasingly divorced from the lacklustre record of the wider UK economy. Growth again disappointed, with GDP in December coming in at 0.1%, undershooting expectations of 0.2%. This was not a late Christmas present Keir Starmer wanted to unwrap, especially given all his political troubles. This uninspiring reading of his government’s handling of the economy won’t help his efforts to cling on as prime minister.
There are glimmers of hope, given that the construction sector continues to be a drag and planning reforms are expected to revitalise activity. Plus, an uptick in consumer confidence should show up in higher spending patterns. But the government’s big push for growth so far has come across as a weak effort.”