Equity market is shrinking

conferences

firms returning cash to shareholders rather than investing for future is hurting equity market

The UK equity market is shrinking as companies return cash to shareholders rather than investing it for the future. In 2004, companies bought back £14bn in shares and paid dividends worth £40bn, according to Citigroup. F&C UK fund manager Jamie Hooper told delegates at the Investment Week Markets Forum that new issuance is less than 20% of that in 1999/2000 and he estimated that, at the current rate, it would take 11 years for the UK's large-cap index to buy itself back entirely. "The market is rewarding conservatism and punishing risk," said Hooper. "The attitude of shareholders is that ...