UK Stock Market Valuation and London’s Ability to Attract World-Class Businesses Under Scrutiny
The valuation of the UK stock market and its ability to attract top businesses to list in London has been a subject of much discussion and contemplation in recent years. Despite the FTSE-100 hitting multiple record highs in 2024, the primary stock index of the UK is still trading at a significant discount compared to its global counterparts.
According to Refinitiv data, the FTSE-100 is currently trading at a price/earnings ratio of 14.78, while the pan-European Stoxx 600 has a ratio of 15.71 and the S&P 500, the main US stock index, has a ratio of 24.7. However, the UK is not the only European economy facing concerns over the relatively low valuation of its stock market.
German Business Community Up in Arms Over Outgoing Deutsche Boerse CEO’s Comments
The German business community was set ablaze after a speech made nearly two months ago by Theodor Weimer, the outgoing chief executive of Deutsche Boerse, surfaced over the weekend. During a speech to the Bavarian Economic Advisory Council at Munich’s luxury Bayerischer Hof hotel on 17 April, Mr Weimer expressed his concerns about the current state of the German government.
Mr Weimer noted his disappointment in the government’s economic policies and attitudes towards immigration and innovation, stating, “We are on the way to becoming a developing country.” He also criticized the lack of investment in German stocks due to their low valuation, saying, “We have become a junk store.”
Mr Weimer, a former investment banker and CEO of Deutsche Boerse since 2018, shared that this sentiment is not just his own but one shared by major international investors he has spoken with. He also expressed that Germany’s global reputation has never been as bad as it is now, stating, “Never before.” He further noted that investors have asked him what kind of government Germany is putting up with, while others simply shake their heads in disbelief at the decline of traditional German virtues.
This is not the first time Mr Weimer has publicly expressed his concerns over the low rating of Germany’s stock market. He has warned multiple times in the past about the risk of European stocks moving their primary listing to the US, a fear shared by many in the City following the decisions of companies like Ferguson, CRH, and Flutter Entertainment to move their primary listing from London to New York.
Broader Critique of the Government Shared by Many in Germany’s Business Community
In his recent speech, Mr Weimer expanded his criticism beyond the stock market and directed it towards the government as a whole. This sentiment is shared by many in Germany’s business community and includes concerns about the country’s car industry, work-life balance over diligent work, and excessive government bureaucracy and interference.
Mr Weimer’s speech has received mixed reactions, with some dismissing it as “more beer tent than Dax-listed company executive,” while others, like entrepreneur Sarna Roeser, have expressed similar sentiments as international investors. Ms. Roeser stated, “With ideological left-green politics, moral finger-pointing, and feminist foreign policy, Germany will no longer be taken seriously at home or abroad and will continue to slide.”
Mr Weimer, who earned €10.6m in 2023, making him Germany’s second-highest-paid CEO after Ola Kaellenius of Mercedes-Benz, may have felt emboldened to speak his mind as he prepares to step down. However, his criticisms have resonated with many in the business community, and the recent European parliament elections saw a significant defeat for Chancellor Olaf Scholz’s coalition government, with the Green Party, led by Mr Weimer’s meeting partner, Robert Habeck, faring particularly poorly.
Many ordinary German voters seem to share the disgruntled sentiments expressed by Mr Weimer, and it is clear that his comments have sparked an important conversation about the current state of the German government and economy.
