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Tui normally transports prospects to sunnier locations. But the dual-listed German tour operator is considering of packing its personal baggage. It is contemplating ditching London to make Frankfurt its major itemizing. Its potential departure could be one other blow to UK capital markets. But it might make sense as Tui will get again on its ft.
Tui chief government Sebastian Ebel is prone to put the proposal ahead at subsequent yr’s annual assembly. The UK nonetheless accounts for nearly two-fifths of group revenues. But three-quarters of shareholders and share-trading volumes are in continental Europe.
The London itemizing is a quirk of previous consolidation. Tui’s tour working enterprise subsumed the UK’s First Choice Holidays in 2007 to create London-listed Tui Travel. The German and British companies had been joined collectively in 2014.
An apparent profit could be decrease capital markets prices. Tui would drop out of the FTSE 250 index and be a part of Germany’s second index, the MDAX. A central and bigger pool of buying and selling liquidity ought to enhance the attractiveness of its shares to institutional traders.
Low liquidity is put ahead as one of many causes for the UK market’s persistent valuation hole. Median common every day volumes for the FTSE All Share are simply 0.15 per cent of the market worth, notes Simon French of Panmure Gordon. That compares with 0.2 per cent for the Stoxx 600 ex-UK and 0.7 per cent for the S&P 500.
Research from the University of Bath suggests adjustments from the EU Mifid II analysis unbundling have contributed to the UK’s liquidity crunch. Analyst protection fell by about 12 per cent for LSE fundamental listing corporations between 2015 and 2020. In the junior Aim market, the place devoted brokers have to be maintained, analyst protection and liquidity have improved.
Tui hinted at its potential journey plans alongside annual outcomes. Lockdowns, state bailouts and recapitalisations have precipitated turbulence in recent times. But its first full yr of income since 2019 ought to mark the primary leg of the lengthy journey again to shareholder payouts.
There are few compelling causes for Tui to not depart London. A larger give attention to liquidity by UK regulators would possibly cease others from additionally withdrawing.