AstraZeneca’s recent decision to reconfigure its stock listings has sparked a wave of relief among investors and market observers. Initially, there were fears that the pharmaceutical giant, which ranks as the second largest company on the London Stock Exchange, would entirely relocate to New York, leaving only a secondary listing in the UK as a nominal gesture towards the government. However, AstraZeneca’s announcement reassures that it will maintain its primary listing in London and its presence in the FTSE 100 index.
The company’s new strategy involves upgrading its listing on the New York Stock Exchange, establishing equal status with its London and Stockholm listings. AstraZeneca asserts that this “harmonised” structure will simplify access for US funds that currently cannot acquire American depositary receipts (ADRs)—a system that allows US investors to own shares in foreign companies—thus allowing them to invest directly in AstraZeneca’s stock. The message from the company is clear: their objective is to provide “a global listing for global investors in a global company.”
However, the broader implications of this move are causing concern. If other major FTSE companies—such as Shell, BP, Unilever, Diageo, and Relx—follow AstraZeneca’s lead, the trend could signal a significant shift in capital markets. Many of these companies also derive a substantial portion of their revenues from the US market, and some may decide that the inconvenience of ADRs is not worth it.
AstraZeneca’s timing may also be influenced by the current political climate surrounding US medicine pricing and pharmaceutical tariffs, particularly under the previous administration. If a trend of UK companies establishing equal listings in New York begins, it could lead to a gradual withdrawal of liquidity from London. The larger investment pool available in the US, combined with the absence of a 0.5% stamp duty on share transactions in the US—or the fact that only UK pension funds and retail investors pay it—could create an environment where London is increasingly less attractive for trading.
Furthermore, while globalisation may be retreating in other sectors, it remains a potent force in capital markets, drawing attention and funds toward US listings. Optimists can point to success stories, including a £13 billion US data center company, Fermi, which is set to join London’s main market alongside its US listing. However, the gravitational pull towards the US market is becoming more pronounced.
UK policymakers need to take notice of these trends. The stamp duty on share transactions is a significant detraction for the allure of the London market, which many have argued should be abolished. If financial authorities need to generate £3 billion to £4 billion from such transactions, they must explore alternative methods.
While Rachel Reeves, currently preoccupied with other pressing issues, should focus on the need to stimulate a deeper pool of domestic buyers for UK equities, more attention should be given to enhancing the appeal of public markets instead of solely pushing pension funds towards UK private assets.
AstraZeneca’s move towards a harmonised global listing is a notable development, but it raises important questions about the future of London as a financial center. The implications of this change could ripple outwards, potentially reshaping the landscape of capital markets for years to come.
