Like a funnel filled with bitumen ceaselessly about to drip, the FTSE 100 is oily, boring and ostensibly inert. It’s been three weeks since Bloomberg splashed on the index nearing a file excessive and nonetheless we wait, transfixed for causes unclear by an experiment seemingly with out finish.

The FTSE’s up 14 per cent this millennium, so its 7 per cent soar within the month to mid-January caught some level-watchers off guard. A contemporary excessive already close by and the information in any other case fairly quiet, the FT’s markets desk rushed to organize a bit for when the champagne second lastly arrived.

Maybe it by no means will. 

Ought to anybody care? The Investor Discussion board clearly doesn’t. From Thursday’s FT:

UK equities are now not seen as a “should personal” asset class, in response to a bunch representing a few of the world’s largest buyers that has referred to as for a reset in relations with British firms to assist drive development out there. 

In its annual evaluate printed on Thursday, the Investor Discussion board stated that “except firms, buyers, regulators and policymakers settle for the fact of this example, UK equities as an asset class will proceed to decrease — to the detriment of all financial individuals and society extra broadly”.

“The declining relevance of UK fairness markets during the last 25 years has been breathtaking,” stated Andy Griffiths, the group’s govt director.

UK equities final yr made up about 2.6 per cent of the Discussion board’s members’ complete property beneath administration, down from 4.2 per cent in 2019 and 5.7 per cent in 2016.

Irrelevance follows underperformance. Although a bias in the direction of defensives and commodities made the FTSE 100 final yr’s top-performing main developed market benchmark, it’s inside a dismal longer-term pattern, significantly for home buyers. Ian Harnett, Absolute Technique Analysis’s chief funding strategist, says £1,000 invested within the FTSE at its earlier peak in Could 2018 would have been “eroded virtually 20 per cent by inflation and could be value 10 per cent much less in US greenback phrases”. 

“Even should you added within the 18 per cent returns accrued from the dividends you’ll have earned, you’ll nonetheless have lagged 30 per cent behind buyers within the S&P 500,” Harnett stated. 

A inventory market isn’t the financial system, readers typically say within the feedback beneath the sort of story, which is especially true of the London market typically and the FTSE 100 specifically. Shunning of UK equities by world buyers is nonetheless a humiliation that authorities can solely deal with on the house entrance.

Chancellor Jeremy Hunt final week outlined an financial and prosperity plan (although “not a sequence of measures or bulletins”) to a room filled with (sceptical) buyers and (job-cutting) Silicon Valley executives. “Being a know-how superpower can change our nation’s future,” Hunt stated. “So let’s make it occur.”

Did the assembled viewers know, for instance, that in response to PwC UK GDP may very well be as much as 10 per cent greater in 2030 due to AI alone? Or that McKinsey thinks the worldwide market alternative for UK inexperienced industries may very well be value greater than £1trn over the following seven years? Why wouldn’t you spend money on the UK?

The FT’s Ian Johnston offered a actuality test over the weekend:

Main UK start-ups are accelerating plans to increase abroad as authorities cuts to analysis and improvement tax credit and extra beneficiant assist elsewhere threaten the UK’s standing as a tech hub …

In November, Hunt lower the rebates out there to small and medium-sized companies in a bid to cut back fraudulent claims, whereas rising credit for bigger firms. The transfer has significantly hit start-ups in strategically necessary industries resembling synthetic intelligence, biotechnology and local weather tech…

…“These [R&D] adjustments solely make different nations extra engaging,” stated Jacob Nathan, co-founder of Epoch Biodesign. “I’m simply not satisfied we’re going to scale within the UK now. It simply doesn’t make sense”. Tax credit have performed a robust function in attracting worldwide buyers to UK companies in addition to rising jobs within the nation, in response to start-ups. 

Again to the FTSE 100, which by Tuesday’s shut had moved exactly 0.01 per cent in seven periods. January had been the second-best for world equities in additional than three many years, based largely on optimism round China’s reopening. However world optimism and UK-listed equities can typically seem inversely correlated:

Earlier within the day the benchmark had drifted 0.7 per cent after the IMF had – within the phrases of Package Juckes, macro strategist at Société Générale – “placed on a pair of knuckle-dusters and smacked its UK development forecast within the nostril”. The IMF thinks UK GDP will decline 0.5 per cent between the ultimate quarter of 2022 and the tip of this yr.

The depth of a UK recession gained’t matter a lot for old-economy shares like Johnson Matthey, Diageo and British American Tobacco, which had helped pull the FTSE 100 again to virtually flat by Tuesday’s shut. To them the UK will not be rather more than a regulatory regime, a reporting foreign money and head workplace deal with.

Capital Economics’ chief UK economist Paul Dales says the FTSE “isn’t totally braced for the recession that lies forward” and sees a fall of round 10 per cent to 7,000 by mid-2023, dragged decrease in step with a pointy drop within the UK composite exercise PMI.

Nonetheless, there’s excellent news on the market in case you are ready to imagine. Dales expects the FTSE to rebound to 9,500 (!) by the tip of 2024 as recessions at dwelling and overseas start to ease and the prospect of rate of interest cuts grows.

Readers shouldn’t anticipate jubilant “FTSE 100 hits record-high” headlines to cross anytime quickly, in different phrases. And should you suppose this submit was written as an experiment in tempting destiny, you’ll be proper.