The FTSE’s Eastern Promise: Drawing Inspiration from Asia’s Stock Market Renaissance
London’s financial district recently witnessed AstraZeneca, the FTSE 100’s second-largest constituent, embarking on a dual listing, making its shares available on the New York Stock Exchange. While the pharmaceutical behemoth maintains its London listing, this transatlantic move underscores a sentiment pervading the UK corporate landscape: a yearning for the often higher valuations afforded to listed businesses in the United States.
The allure of the US market is undeniable, underpinned by its sheer scale, abundant resources, and a risk-embracing culture that often translates to premium valuations. However, instead of solely focusing on the Western powerhouse, perhaps the UK should consider a different compass direction for inspiration. Recent diplomatic overtures by political leaders towards Beijing and Tokyo suggest a growing recognition that the solutions to the UK stock market’s challenges might lie eastward.
Merlion Park in Singapore, a symbol of the nation’s robust financial landscape.
Beyond a Dead Cat Bounce: The State of the UK Market
While the UK stock market has experienced a period of relative recovery in the past year after a prolonged period of stagnation, skepticism persists. Critics label the rally a mere “dead cat bounce,” a temporary upswing devoid of genuine investor confidence. This assessment is fuelled by consistent outflows from domestic funds, a scarcity of new listings, and a general lack of the “animal spirits” – the intangible enthusiasm and confidence that drive market growth.
In stark contrast, several East Asian economies, including South Korea, Japan, and Singapore, have enjoyed significant stock market surges in recent years. These gains are bolstered by robust investor demand and proactive, strategic government policies. Despite the inherent differences between these markets, the underlying success factors offer valuable lessons for the UK.
Decoding the Asian Advantage: Three Case Studies
Each East Asian market presents a unique narrative. South Korea’s KOSPI index has doubled in value, largely driven by the dominance of technology giants like Samsung and SK Hynix. Japan’s economy is undergoing a period of significant fiscal stimulus coupled with rising bond yields. Singapore, meanwhile, has consistently outpaced the UK in economic growth.
However, despite their individual trajectories, these three nations share crucial commonalities with the UK. All three grappled with investor apathy and a decline in the number of publicly listed companies. They are all navigating a global landscape where capital-raising is predominantly concentrated in the US, China, and India. Furthermore, the stock markets of Japan and Singapore are heavily weighted towards traditional industries, such as banking, rather than solely relying on the appeal of high-growth technology sectors.
Singapore: A Model of Proactive Intervention
The success of the Singapore Exchange Group, whose share price has nearly doubled in the past two years, serves as a compelling example. Alongside a burgeoning stock market, Singapore has witnessed a sharp increase in local equity trading volumes. This is attributed to deliberate initiatives aimed at positioning Singapore as a leading pan-Asian trading hub.
The Singaporean government actively intervened to revitalize its underperforming stock market. In February 2025, it launched the S$5 billion (£2.9 billion) Equity Market Development Programme, designed to inject government funds into local mid-cap companies. Furthermore, the government introduced substantial tax incentives for funds allocating at least 30% of their assets to Singaporean stocks. This proactive approach demonstrates the potential impact of targeted government intervention.
International investors have been flocking to the Tokyo Stock Exchange, drawn by reforms and shareholder-friendly policies.
Japan: Corporate Governance Reform and Investor Engagement
Japan’s resurgence is largely credited to a “name-and-shame” campaign spearheaded by the Tokyo Stock Exchange. This initiative targeted companies with a price-to-book ratio below one, effectively compelling boards to prioritize shareholder returns. The subsequent focus on returning cash to shareholders and dismantling inefficient corporate crossholdings caught the attention of international investors, triggering a significant influx of capital.
In January 2024, Japan expanded its version of the Individual Savings Account (ISA), increasing investment limits and extending the tax-exempt status. This initiative, modeled on the UK system, is specifically designed to encourage investment in stocks and funds, rather than traditional cash accounts.
Even Pinkfong, the creator of Baby Shark, celebrated its listing in Seoul, highlighting the cultural importance of stock market participation.
South Korea: Protecting Minority Shareholders
South Korea’s “Value Up” program, launched in 2024, aims to eliminate the undervaluation of domestic stocks compared to their international counterparts. To further bolster investor confidence, South Korea amended its Commercial Act in mid-2025 to include explicit duties for directors to prioritize the interests of minority shareholders, not just controlling families. The amendment also mandated an increase in the number of independent directors, further strengthening corporate governance.
Political leaders are increasingly looking East for economic solutions.
Adapt, Don’t Adopt: Lessons for the UK
While a direct replication of these East Asian strategies may not be suitable for the UK, key takeaways can be implemented. For example, the UK could consider tax incentives similar to those offered in Asia to stimulate investment. While abolishing stamp duty on shares might be financially prohibitive, the UK could emulate the mandatory minimum IPO allocation for retail investors, thereby forcing the City to engage more effectively with the share-buying public.
Although “naming and shaming” underperforming companies, as practiced in Japan, might not be culturally appropriate in the UK, the government could adopt a similar approach by highlighting asset managers who fail to adhere to best practices. Publicly acknowledging pension funds that allocate sufficient capital to UK equities while calling out those that do not could create positive pressure.
The ongoing refocus of the 2026 UK Stewardship Code, shifting emphasis from ESG (environmental, social, and governance) factors to capital allocation, presents an opportunity. The government could introduce a rating system for asset owners based on their level of engagement with listed companies.
Reigniting Animal Spirits: A Call to Action
By strategically employing a combination of incentives and accountability measures, the UK can revitalize its stock market and reignite the vital “animal spirits.” This proactive approach will not only attract domestic and international investment but also discourage leading companies like AstraZeneca from seeking greener pastures overseas, solidifying the UK’s position as a global financial hub for years to come.
Rupak Ghose is an adviser to fintech companies and a former financials research analyst.
