GAM warns that extending London stock trading to 24 hours will fail to revive a market grappling with shrinking volumes and intensifying global competition, raising doubts about the outlook for UK equities.
GAM's warning that 24-hour trading won't revive the London market underscores bearish sentiment for UK equities. The FTSE 100, as the benchmark index, is directly tied to the health of the London market; expectations of sustained low volumes and structural headwinds suggest limited upside. Extended hours could fragment liquidity, making the index more vulnerable to outflows.
The FTSE 100 could face downward pressure if the market perceives that structural issues will persist, as the index's performance is tied to London's trading ecosystem. Failure to boost activity may reinforce bearish positioning.
Yes, because its liquidity and attractiveness are directly linked to the health of the London Stock Exchange. If extended trading fails, the FTSE 100 may see reduced investor interest compared to indices on exchanges with stronger volume growth.
GAM Investments has cast doubt on the London Stock Exchange's proposal to shift to 24-hour trading, arguing it is unlikely to revive flagging market activity. The asset manager cited structural challenges such as declining equity volumes and competition from other venues. Extended hours alone may not attract sufficient liquidity to offset long-term headwinds, leaving UK equities vulnerable.
The London Stock Exchange has been considering extending trading hours to 24 hours a day to attract more international investors, particularly from Asia and the Americas, and to compete with other global exchanges.
GAM argues that the core issues are structural, such as declining equity volumes and increased competition, and simply extending hours won't address the fundamental lack of investor demand. They see the move as unlikely to generate sufficient new trading activity.
If extended trading fails to boost volumes, UK equities could continue to face liquidity challenges, potentially weighing on valuations and deterring new listings, reinforcing a negative cycle for the London market.