The UK stock market is shrinking at its fastest pace in history amid a wave of foreign takeovers which have propelled the FTSE 100 to its strongest week in eight months.
A £4.3bn proposed takeover of cyber security firm Darktrace and the rejection of a £31bn bid for Anglo American on Friday capped a frenetic week for deal activity on the London Stock Exchange.
Foreign swoops for UK listed companies has accelerated the pace of exits from the London stock market, and the recent frenzy has raised fears over the future of the exchange.
Excluding takeovers, the size of UK public equities has already shrunk by a net £30bn over the past year, equivalent to about 1.2pc of the entire market, and the fastest pace on record, according to Goldman Sachs.
The bank blamed the lack of new listings and share buybacks.
An M&A frenzy this week has raised fresh fears for the exchange.
Anglo American, the FTSE 100 mining giant, on Friday rejected a £31bn takeover bid by rival BHP Billiton, calling the offer “opportunistic”. BHP has until May 22 to lodge another bid.
The flurry of interest in UK companies helped lift the FTSE 100 by 2.7pc this week, marking the best week for Britain’s flagship index since last September.
The UK’s blue chip index ended up at 8,136.52 points last night, hitting a record high for the fourth consecutive day in a row.
Charles Hall, an analyst at Peel Hunt, said some of the rise could be attributed to short term investors who buy shares in companies subject to a bid.
“Short term money can boost your market but when they leave that money leaves with them. What we need is fund flows into the UK equity funds.”
The fresh dealmaking means around £100bn of market value is set to leave the exchange through takeovers and delistings this year, according to Peel Hunt.
If the pace continues, the domestically focused FTSE 250 could be extinct by 2030, it said.
Mr Hall added: “The trend line for the London market is bad because companies leaving will make us smaller.
“We’re living in a global world and it’s either be the hunter or be hunted, and we are definitely being hunted.”
More than 20 UK listed companies are currently facing takeover bids, including the proposed takeovers of Royal Mail, DS Smith and Virgin Money.
At the same time, there have been fewer stock market debuts on the London stock market, squeezing the overall number of companies listed on the market.
London is yet to register a major new flotation this year.
It came as the former Formula One owner CVC secured €400m (£343m) more than expected from its Amsterdam float after rejecting London.
Shares in the private equity giant, which owns a stake in the Six Nations rugby competition and masterminded the buyout of F1, were set at €14 - the midpoint of an indicative €13 to €15 range - and they rose 25pc to €17.55 on their debut on Friday.
Separately on Friday, energy giant TotalEnergies, one of France’s largest companies, dealt a blow to France by suggesting it could move its primary listing to New York. European indices have been struggling to compete with the US, where listings tend to attract much higher valuations, while chief executive pay is far more generous.
Shell has also suggested it is considering quitting the FTSE 100 for New York amid concerns it is under-appreciated by investors.