As the initial optimism of the New Year begins to settle, a distinct and revitalised interest in the UK market is emerging, particularly from international investors. This shift signals a potential turning point for London's financial landscape in 2026, according to insights from industry leaders.
A Renewed Appetite for UK Assets
Recent discussions at the landmark dbAccess UKI Conference 2026, organised by Deutsche Numis, highlighted a notable change in sentiment. The event brought together hundreds of global investors with leading UK-listed corporations, fostering crucial dialogue about the future of London's markets.
During a particularly illuminating Q&A session, Dame Julia Hoggett, CEO of the London Stock Exchange, emphasised the substantial progress made through listing reforms. She stressed, however, that continued collaboration across both private and public markets is essential to ensure companies receive the vital capital they need at every stage of their development.
Addressing Capital Flow Challenges
Dame Julia pointed out that while there is no shortage of capital within the UK, a greater focus must be placed on directing these funds into productive assets, including domestic listed companies. A reversal of the outflows from UK equities by domestic pension funds would prove exceptionally positive for the markets. Such a move would enhance market vitality and improve the ability to raise fresh equity on the London exchanges.
Conference conversations revealed that after several years of caution, UK boardrooms are beginning to shift their focus towards growth strategies. This represents a significant departure from previous discussions, which often centred on capital reallocation to shareholders. Now, corporations are actively considering targeted mergers and acquisitions as a means to complement their long-term expansion plans.
Investor Sentiment Defies Geopolitical Uncertainty
Despite heightened geopolitical tensions, including renewed trade disputes and tariff risks, investor sentiment at the conference remained overwhelmingly positive. What stood out this year was a clear and renewed appetite for the UK market, especially from overseas investors.
These international players highlighted the opportunity created by the disparity between the underlying quality of UK assets and their relatively discounted share prices. This shift is significant as it demonstrates that investors are looking beyond prevailing media narratives and focusing on core fundamentals: attractive valuations, a robust financial ecosystem, and a talent base that continues to be the envy of the world.
The Challenge of Sustained Growth
The marked level of take-private activity over the past year further underscores the UK's relatively low valuations. However, the key challenge for 2026 will be ensuring that London's public markets enable companies to thrive, rather than merely serving as a hunting ground for acquirers.
London's Enduring Competitive Advantages
The fundamental pull factors that differentiate London from other global capital markets remain firmly in place. Just weeks before the UKI Conference, London was named the most powerful city in the world in the Global Power City Index, highlighting its exceptional strengths in cultural interaction and accessibility.
Furthermore, global economic advisory firm Oxford Economics once again ranked London as the world's top city for human capital. This accolade is thanks to its strong pipeline of skilled graduates, global talent, and world-class universities.
The City has long benefited from a progressive and robust regulatory environment, with recent changes to the UK Listing Rules providing greater flexibility for listed companies. London remains, by a considerable margin, the largest capital market in Europe and one of the most influential globally.
Building on Strong Foundations
London continues to outperform on the fundamentals that global investors prioritise. Nonetheless, with global geopolitical activity expected to remain volatile in the coming months, London must continue to build on its strong foundations. This involves actively challenging negative narratives to ensure the City remains appealing for both corporations and investors alike.
Strategic Priorities for London in 2026
Following extensive discussions with CEOs and global investors over a packed two-day schedule, several key priorities have emerged for London's preparation in the year ahead:
- Move from Defence to Ambition: London is anticipated to see a rebound in IPO activity during 2026. However, markets will likely need to navigate persistent geopolitical uncertainty and global volatility. This environment will require companies to be agile and proactive to seize new opportunities as they arise.
- A Venue for Growth, Not Just Exit: The City must solidify its position as a hub for growth, including through targeted M&A. A positive shift is already visible in boardroom focus, as more corporations, alongside global investors, begin to view London as a platform for expansion rather than merely a convenient exit route.
- Protect the City's Deep Talent Base: London's strength is fundamentally underpinned by the depth of its talent pool and its world-class educational institutions. Prioritising the right training and enhancing ease of movement for STEM-skilled workers should be a key focus to maintain this competitive edge.
- Challenge Negative Narratives with Decisive Action: There must be a concerted effort to actively demonstrate London's strengths. Highlighting the latest positive regulatory developments, the exceptional talent pool, and any uplift in IPO activity will be crucial to counter negative perceptions and continually broaden the City's appeal to both domestic and international investors.
If the narrative surrounding UK capital markets can be aligned with the substantive conversations industry stakeholders are having on the ground, London will be better positioned to leverage its fundamental strengths. This alignment is key to fortifying the City's status as a global financial powerhouse well into the future.
