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In recent years, an increasing number of UK shares have left the market. London Stock Exchange (LSE), preferring to migrate its main listing abroad.
Flutter Entertainment and CRH He recently made the leap to the United States and FTSE 100 unconditional Shell and Ashtead They are considering it. Better valuations, a broader investor base and a more favorable regulatory environment are often cited as key motivators.
This trend appears to suggest a change in the way global markets operate, raising concerns about the UK's future competitiveness.
While this move promises better growth potential for these companies, it may complicate access for UK-based investors. When choosing stocks to buy, investors should consider the impact this may have on their portfolio.
I have identified three more UK companies with a reason to consider leaving.
AstraZeneca
There are some good reasons why the largest FTSE 100 company by market capitalization could consider moving to the United States. Earlier this year, the government's budget plans included a possible cut in funding for a vaccine factory in Merseyside.
Additionally, some of its new medical developments have been rejected by the NHS for not showing sufficient value. The United States promises higher valuations for biotech companies, greater access to capital and a less rigorous regulatory environment.
HSBC
The UK's largest bank was once headquartered in Hong Kong and still earns half of its global revenue from Asia. Its British business is small in comparison and it has already downgraded its Canary Wharf headquarters to the City.
With the UK's financial landscape shrinking, you might consider returning to Hong Kong or Shanghai. Additionally, the United States offers a better banking environment with higher valuations for financial institutions and more flexible regulatory frameworks than the United Kingdom.
British American Tobacco
British American Tobacco (LSE: BATS) could consider moving its primary listing to the US as it generates 44% of its revenue in the country. GQG Partners has already pressured it to move to New York, where its key rival Philip Morris trading at a higher valuation.
Recently, it has been struggling to raise capital to fund its transition to lower-risk products like vaping and heated tobacco. You may find that the United States is more favorable to innovation in nicotine products compared to the United Kingdom and its increasingly restrictive policies.
An attractive option?
BAT CEO Tadeu Marroco has described the idea of a US measure as “distraction“, so it is unlikely to happen anytime soon. That's good news for UK investors, as it's a reliable dividend payer with a high yield of 8.2%.
But weak performance and high expenses have put the company in a difficult position. It has racked up huge debt and posted a loss of £13.9bn in its latest figures. If the expensive switch to next-generation vaporizers and similar products doesn't pay off, you could end up in financial trouble.
Still, analysts seem optimistic about a recovery. Profits are forecast to grow 44% over the next 12 months, returning profitability. With a forward price-to-earnings (P/E) ratio of nine, that would give it an attractive valuation.
My own investment in British American Tobacco has served me well so far. If it delivers good results for the full year on February 13 next year, I will buy more shares.
