The London Stock Exchange, which has endured a prolonged period of lacklustre performance and high-profile departures, is finally showing tentative signs of a mini-revival. This flicker of optimism stems from two significant developments: the potential initial public offering (IPO) of the fast-fashion giant Shein and the possible return of the chip designer ARM Holdings to the London market.
A Dual Boost for the City's Fortunes
For years, the narrative surrounding the London market has been one of decline, characterised by companies choosing to list in New York and a dearth of major new flotations. The situation reached a low point when the UK's premier tech success story, ARM, opted for a sole listing on Nasdaq in 2023, a move seen as a major blow to London's prestige. However, the mood is shifting. The potential £50 billion IPO of Shein, though controversial due to its business model, represents precisely the kind of large, international listing that London has been desperately seeking.
Simultaneously, there is growing speculation that ARM's parent company, SoftBank, is considering a secondary listing for the chip designer in London. This move, while not as impactful as a primary listing, would still be a symbolic victory. It would signal that London remains a relevant and attractive venue for global tech giants, helping to repair some of the damage done by ARM's initial snub.
Challenges and the Road Ahead
Despite this encouraging news, significant challenges remain. The Shein flotation, while large, comes with considerable baggage, including intense scrutiny over its environmental and labour practices. Its success is not guaranteed, and a problematic debut could harm market sentiment. Furthermore, one or two deals do not constitute a full recovery. The underlying issues of valuation and liquidity that have plagued the London market need sustained attention from policymakers and regulators.
The government and the Financial Conduct Authority have implemented reforms to make London more competitive, but the true test will be whether a pipeline of quality companies chooses to call the Square Mile home. The possible return of ARM and the arrival of Shein could act as a catalyst, encouraging other firms to consider London seriously. As one commentator noted, momentum in the IPO market is fragile but crucial; these two developments could provide the spark needed to change the prevailing narrative.
In conclusion, the London Stock Exchange is at a potential turning point. The combined effect of a blockbuster Shein IPO and the strategic return of ARM Holdings offers a rare double dose of positive news. While it is too early to declare a full recovery, these events provide a tangible foundation for optimism. They demonstrate that with the right mix of companies and continued regulatory support, London can still compete on the global stage for major financial listings.
