Magazine article Management Today

Selling the UK Short

Magazine article Management Today

Selling the UK Short

Article excerpt

Love them or hate them, City analysts are here to stay. But a method of monitoring the performance of the commanding heights of Britian's economy which depends on 1,600 untrained (albeit highly intelligent and highly motivated) people is absurd. Seen by some as little more than bookies' runners, analysts help direct the flow of funds to companies with a total stock-market value of 568 pound sterling billion.

The very cream of UK industry is in their maw. For unlike the situation in Germany or France, non-quoted companies in Britain pale into insignificance beside the quoted sector. Every major player every major industry is a quoted company, followed by a a horde of analysts pontificating on their share price and concerned solely with short-term share performance rather than long-term growth and investment. Nothing delights the analysts more than a bitter takeover battle with white knights charging to the rescue. In the welter of rumour and counter-rumour, fortunes can be made as she prices gyrate by the second. But is this the way to run a mature economy that moe than ever cries out for a long-term approach, particularly when manufacturing investment fell by 15% in 1991?

Much of their research is unoriginal and binned quickly by investment institutions. Worse still, most analysts' experience of industry is limited to a few brief factory visits, where point-scoring against rival analysts and questions designed to find some reason to move the share price immediately are the order of the day. Enough is enough.

The Major government, with a flesh mandate and less enamouted of the City than previous Tory administrations should prod the Stock Exchange to push through reforms to help develop the long-term culture. As we have consistently arugued at Management Today, UK takeover rules are too lax. …

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