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There has been much soul-searching and agonising during recent years over the valuation of the UK stock market – intertwined with a debate over London’s ability to attract world-class businesses to list here.

Even though the FTSE-100 has hit several record highs so far in 2024, the UK’s premier stock index is still trading at a significant discount to its global peers.

The FTSE-100 is currently trading on a price/earnings ratio – a valuation measure widely used by equity investors – of 14.78 times, according to Refinitiv data, compared with one of 15.71 for the pan-European Stoxx 600 and one of 24.7 for the S&P 500, the main US stock index.

But the UK is not the only European economy where concerns are being expressed about the relatively lowly valuation applied to its stock market.

German business has been set ablaze after a speech made nearly two months ago by Theodor Weimer, the outgoing chief executive of Deutsche Boerse, surfaced at the weekend.

Addressing the Bavarian Economic Advisory Council on 17 April at Munich’s luxury Bayerischer Hof hotel, Mr Weimer said he had just had his 18th meeting with Robert Habeck, Germany’s vice chancellor and economics minister.

He told his audience: “And I can tell you, it’s a sheer disaster.”

German Economy and Climate Minister Robert Habeck
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German economy and climate minister Robert Habeck

Mr Weimer said that, when Mr Habeck had come to office, he had been encouraged by the minister’s preparedness to listen to him – but said that enthusiasm had now dissipated.

In a no-holds-barred attack on Germany’s coalition government, Mr Weimer criticised not only its economic policy but its attitudes towards immigration and innovation.

He added: “We are on the way to becoming a developing country.”

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Mr Weimer, a former investment banker who has been CEO of Deutsche Boerse since 2018, said this was not only his opinion but those of major international investors he speaks with.

He added: “Our reputation in the world has never been as bad as it is now. Never before.”

Mr Weimer said that he had been asked by investors in Singapore what kind of government Germany was putting up with while, elsewhere, he said people “just shake their heads and wonder where the German virtues have gone”.

He said the only investment in German stocks was being made “opportunistically” because its market was so cheap.

He went on: “We have become a junk store.”

Not the first outburst

It is not the first time Mr Weimer, who is renowned for his plain speaking, has bemoaned the lowly rating on Germany’s stock market.

He has drawn attention several times in the past to the risk of European stocks moving their main listing to the US – something that has also alarmed City figures following the decision of companies like Ferguson, CRH and Flutter Entertainment to move their primary stock market listing from London to New York.

But this speech saw Mr Weimer widen his comments to a broader critique of the government – and one which is shared by many in Germany’s business community.

It includes “destroying” the country’s car industry, long a source of industrial prestige, by insisting on the phasing out of new petrol and diesel vehicles and refusing to subsidise the energy transition in the way the Biden administration has in the US.

Other criticisms include what he described as an “orientation towards do-gooderism” in migration policy and encouraging working from home and promoting work-life balance over the traditional German virtue of diligent work.

Mr Weimer also complained that the government’s “economic policy lacks a compass” and said excessive government bureaucracy and interference in the economy was patronising to ordinary Germans.

He added: “Damn it, I don’t want to be protected by this government.”

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Reaction to the speech has been mixed.

Verena Hubertz, an MP in the SPD – the biggest party in the coalition government – told the Financial Times: “The bizarre speech is more beer tent than Dax-listed company executive.”

But Sarna Roeser, one of Germany’s most celebrated young entrepreneurs, told the newspaper Die Zeit that, as someone who travels abroad widely, she had also heard similar comments from international investors.

She added: “With ideological left-green politics, moral finger-pointing and feminist foreign policy, Germany will no longer be taken seriously at home or abroad and will continue to slide.”

Mr Weimer, whose €10.6m pay package in 2023 made him Germany’s second best-paid CEO after Ola Kaellenius of Mercedes-Benz, may have felt emboldened to speak because he is about to step down.

There is little doubt, though, that in attacking chancellor Olaf Scholz’s government, he has said publicly what many German business people are saying privately.

And to judge by the spanking Mr Scholz’s coalition received in the European parliament elections at the weekend – Mr Habeck’s Green Party did particularly badly – many ordinary German voters seem similarly disgruntled.

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Trump fires tariff threats at more nations as EU ‘ready for all scenarios’

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Trump fires tariff threats at more nations as EU 'ready for all scenarios'

Donald Trump has revealed a list of more nations set to face delayed ‘liberation day’ tariffs from 1 August.

He has threatened tariffs of 30% on Algeria, 25% on Brunei, 30% on Iraq, 30% on Libya, 25% on Moldova and 20% on the Philippines. Sri Lanka was later told it faced a 30% duty.

Letters setting out the planned rates – and warning against retaliation – are being sent to the leaders of each country.

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They were the latest to be informed of the president‘s plans after Japan and South Korea were among the first 14 nations to be told of the rates they must pay on their general exports to the US from 1 August.

The duties are on top of sectoral tariffs, covering areas such as steel and cars, already in place.

Mr Trump further warned, on Tuesday, that a 50% tariff rate on all copper imports to the US was looming.

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He has also threatened a 200% rate on pharmaceuticals and is also expected to take aim at all imports of semiconductors too.

The European Union, America’s largest trading partner in combined trade, services and investment, is expected to get a letter within the next 48 hours unless further progress is made in continuing talks.

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The bloc, which Mr Trump has previously claimed was created to “screw” the US, has been in negotiations with US officials for weeks and working to agree a UK-style truce by the end of the month.

The EU has retaliatory tariffs ready to deploy from 14 July but it is widely expected to delay them until such time that any heightened US duties are imposed.

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It remains hopeful of a deal in the coming days but European Commission president Ursula von der Leyen told the European Parliament: “We stick to our principles, we defend our interests, we continue to work in good faith, and we get ready for all scenarios.”

While the UK’s so-called deal with Mr Trump is now in force, it remains unclear whether steelmakers will have to pay a 50% tariff rate, deployed by the US against the rest of the world, as some final details on an exemption are yet to be worked out.

The rate is currently 25%.

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Nvidia wins race to become first $4trn listed company

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Nvidia wins race to become first trn listed company

Nvidia has become the first stock market-listed company to achieve a value of $4trn.

Its share price rose by more than 2% at the market open on Wall Street to reach the milestone moment.

It was achieved just over a year since Nvidia overcame the $3trn barrier and overtook Apple, in market cap terms, in the process.

The AI-focused chipmaker has been the darling of Wall Street for many years.

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The value of its shares has risen by 409,825% since its market debut in 1999.

Its status has been cemented thanks to the rush for AI technology – suffering several wobbles along the way – but nothing significant when you refer to the percentage rise of the past 26 years.

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The most recent pressures have come from the emergence of the low-cost chatbot DeepSeek and concerns for global AI demand as a result of Donald Trump’s trade war hitting growth.

Financial markets have been taking a more risk-on approach to the trade war since the delays to “liberation day” tariffs in April.

It’s explained by a market trend that’s become known as the TACO trade: Trump always chickens out.

Nvidia hits $4trn valuation
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The milestone is reported by Sky’s US partner CNBC, seen on screens at the New York Stock Exchange. Pic: Reuters

It has helped US stock markets post new record highs in recent days.

The wave of optimism is down to the fact that the president is yet to follow through with the worst of his threatened tariffs on trading partners.

Corporations are also yet to report big hits to their earnings – a fact that is also propping up demand for shares.

If Mr Trump does go all-out in his trade war, as he has now threatened from 1 August, then that $4trn market value for Nvidia – and wider stock markets – could be short-lived, at least in the short term.

But market analysts believe Nvidia’s value has further to go.

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Matt Britzman, senior equity analyst at Hargreaves Lansdown, said of its meteoric rise: “Once known for powering video games, NVIDIA has transformed into a foundational player in AI infrastructure.

“Its high-performance chips now drive everything from natural language processing to robotics, making them essential to training and deploying advanced AI models.

“Beyond hardware, its full-stack ecosystem – including software platforms and developer tools – helps companies scale AI quickly and efficiently. This end-to-end approach has positioned Nvidia as a cornerstone in a market where speed, scalability, and efficiency are critical.”

He added: “The key question is where it goes from here, and while it might seem strange for a company that’s just passed the $4trn mark, Nvidia still looks attractive.

“Growth is expected to slow, and it’s likely to lose some market share as competition and custom solutions ramp up. But trading at a relatively modest 32 times expected earnings, and over 50% top-line growth forecast this year, there’s still an attractive opportunity ahead.

“For investors, it remains a compelling way to gain exposure to the AI boom – not just as a participant, but as one of its architects.”

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Greater risk to UK economy following Trump’s tariffs, says Bank of England

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Greater risk to UK economy following Trump's tariffs, says Bank of England

The future of the UK economy is weaker and more uncertain due to President Trump’s tariffs and conflict in the Middle East, the Bank of England has said.

“The outlook for UK growth over the coming year is a little weaker and more uncertain,” the central bank said in its biannual health check of the UK’s financial system.

Economic and financial risks have increased since the last report was published in November, as global unpredictability continued after the announcement of country-specific tariffs on 2 April, the Bank’s Financial Stability Report said.

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These risks and uncertainty, as well as geopolitical tensions, like the wars in Ukraine and the Middle East, are “particularly relevant” to UK financial stability as an open economy with a large financial sector, it said.

Pressures on government borrowing costs are “still elevated” amid significant doubts over the global economic outlook.

Had a 90-day pause on tariffs not been announced, conditions could have worsened, the report added.

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The chance of prices rising overall has also grown as tensions between Iran and Israel and the US threaten to push up energy prices.

Possible higher inflation in turn raises the prospect of more expensive borrowing from higher interest rates to bring down those price rises. This compounds the pressure on state borrowing costs.

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Mortgages

Borrowing costs for about 40% of mortgage holders are set to become costlier over the next three years as households refix to more expensive deals, affecting 3.6 million households, the Bank said.

Many homes have not refixed their mortgage since interest rates began to rise in 2021, meaning the full impact of higher rates has yet to filter through.

Those looking to get on the property ladder got a boost as the Bank said lenders could issue more loans deemed to be risky, meaning people could be able to borrow more.

Financial institutions can now have 15% of their new mortgages deemed risky every year, up from the current 9.7%.

Riskier mortgages are those with a loan value above 4.5 times the borrower’s income.

Be ‘prepared for shocks’

Despite the global and domestic economy concerns, the outlook for UK household and business resilience remained “strong”, the Bank said.

Investors, however, were warned that there could be “sharp falls in risky asset prices”, which include shares and currencies.

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If there are any vulnerabilities in non-bank lenders, it “could amplify such moves, potentially affecting the availability and cost of credit in the UK”.

“It is important that in their risk management, market participants [people involved in investing] are prepared for such shocks.”

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The steep market reaction following the tariff announcements in April “highlights that the interconnectedness of global financial markets can mean stress from one market can move quickly to others,” the report said.

Overall, though, “household and corporate borrowers remain resilient”, the Bank concluded.

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