Are UK companies looking across the pond to the US for inspiration all wrong? Maybe the real lessons for revitalizing the UK stock market lie further east, in places like Japan, South Korea, and Singapore.
Key Points
- East Asian stock markets like South Korea, Japan, and Singapore have outperformed the UK in recent years.
- These countries have implemented government policies and incentives to boost investor appetite and market activity.
- Key strategies include tax breaks, corporate governance reforms, and campaigns to improve company valuations.
- The UK could benefit from adopting similar measures to stimulate its stock market and retain companies.
Looking East for Stock Market Inspiration
After a tough decade, UK stock prices have seen some gains, but some call it a “dead cat bounce” – a temporary recovery lacking real momentum. Meanwhile, East Asian markets are thriving.
East Asia’s Stock Market Success
Countries like South Korea, Japan, and Singapore have seen bigger stock market gains. This is driven by stronger investor interest and smart government policies. Each market has its unique factors, but common threads exist.
“International investors increased their allocations to the three east Asian countries and the UK because of the massive valuation discount to the US market, but local retail demand also improved in Japan and South Korea last year.”
What Are They Doing Right?
Singapore, facing a shrinking stock market, launched the S$5 billion (£2.9 billion) Equity Market Development Programme in 2025 to invest in local mid-cap stocks. They also introduced tax breaks for funds investing at least 30% of their assets in Singapore stocks.
Japan used a “name-and-shame” campaign by the Tokyo Stock Exchange to push companies with low price-to-book ratios to improve returns to shareholders. This attracted international investors. They also expanded their version of the UK’s Isa, focusing on stocks and funds.
South Korea’s 2024 “Value Up” program aimed to boost domestic stock valuations. They also amended their Commercial Act to protect minority shareholders and increase independent directors.
Lessons for the UK
The UK has tweaked listing requirements, but more can be done. Tax incentives, like those in East Asia, could help. A mandatory minimum IPO (initial public offering, when a company first offers shares to the public) allocation for retail investors could also boost public engagement.
The UK could also take a page from Japan’s playbook and call out underperforming companies. “The 2026 UK Stewardship Code is refocusing efforts away from ESG — environmental, social and governance — to capital allocation; the government could rate asset owners by their level of engagement with listed companies.”
Stocks Mentioned
- AZN (AstraZeneca): Shares began trading in the US last week.
What This Means For You
- Look East: Consider diversifying your portfolio with exposure to East Asian markets.
- Stay Informed: Keep an eye on government policies and initiatives that could impact market performance.
- Support Local: Advocate for policies that support UK companies and encourage domestic investment.
- Engage: Demand greater transparency and accountability from asset managers.
- Think Long Term: Investing is a marathon, not a sprint. Focus on long-term growth potential.
Source: www.thetimes.com
