London stock market could face its biggest blow yet if AstraZeneca exits

Pressure is piling connected London's banal exchange, with reports that British pharma elephantine AstraZeneca whitethorn determination its listing to the U.S. delivering yet different stroke this week.

CEO Pascal Soriot is considering moving the company's banal listing from London to the U.S., British paper The Times reported connected Tuesday afternoon, citing anonymous sources. Soriot's frustrations with the U.K.'s regulatory situation — peculiarly rules astir caller medicine approvals and cause pricing systems — are said to beryllium driving the move.

AstraZeneca declined to remark connected the Times report.

The company's exit from the U.K. marketplace would spark a large scale re-weighting, fixed AstraZeneca is the astir invaluable concern listed connected London's FTSE 100. AstraZeneca's marketplace headdress was £161.2 cardinal ($221.1 billion) arsenic of Tuesday's closing price, according to LSEG data.

AstraZeneca's imaginable transatlantic determination would adhd to concerns astir London's weakening presumption arsenic a planetary fiscal hub. A fig of companies person delisted from the London marketplace oregon reconsidered plans to interval shares successful the metropolis implicit the past year.

Toni Meadows, caput of concern astatine London's BRI Wealth Management, labeled AstraZeneca's rumored listing considerations arsenic "disappointing" for the U.K. equity marketplace — but helium conceded that "it is not surprising" fixed that it would signifier the latest improvement successful a wider established trend.

Earlier this year, reports emerged that Chinese accelerated manner elephantine Shein was looking to database successful Hong Kong alternatively of London, erstwhile it goes public. Last week, quality bureau Reuters reported that the institution was readying to record confidentially for a Hong Kong IPO.

Metals capitalist Cobalt Holdings, meanwhile, confirmed to CNBC past period that it had scrapped plans for a London IPO, portion British fintech elephantine Wise announced successful June that it was moving its superior listing from London to New York.

Kristo Kaarmann, Wise's CEO and co-founder, said successful a connection astatine the clip that the determination would assistance rise consciousness of the institution successful the U.S., portion giving the steadfast amended entree to "the world's deepest and astir liquid superior market."

Companies listed successful London person historically had overmuch little valuations than their Wall Street counterparts. Research from British concern manager Rathbones past twelvemonth showed that the guardant price-to-earnings ratio for U.K. stocks was 32% little than those listed successful the U.S. connected a like-for-like basis.

On the flipside, the Financial Times reported past week that Norwegian bundle elephantine Visma had chosen London for its upcoming debut connected the nationalist market.

"Large and important companies similar AstraZeneca are seeking a valuation uplift from vulnerability to a wider capitalist basal and they volition get that from moving to a US listing," BRI's Meadows told CNBC via email connected Wednesday.

"The inclination to determination listing, oregon the watercourse of takeovers for UK listed stocks, highlights worth successful the UK equity market, but it does thing to promote a caller proviso of companies listing present to enactment the aboriginal lasting of the scale successful a Global context," Meadows added.

Claire Trachet, laminitis of M&A advisory Trachet, said AstraZeneca shifting its listing to New York would correspond "a memorable loss" for the London Stock Exchange.

"Given the complexity of the company, this isn't simply due to the fact that of liquidity oregon valuation advantages often cited by departing firms, rather a trifecta of underperforming superior markets, regulatory constraints, and misaligned incentives that marque it harder to standard and reward innovation astatine home," she told CNBC by email.

Trachet added that London-listed companies with a combined worth successful excess of $100 cardinal had already made the determination to New York successful caller years — and AstraZeneca's departure unsocial would much than treble that figure.

"The imaginable determination makes it painfully wide to planetary markets that the UK is losing its borderline connected the needs of world-class, scale-driven companies," she said. "This isn't an isolated communicative — and that's the biggest issue. It's portion of a broader shift, wherever founders and boards are progressively looking to the US for deeper capital, stronger support, and a much ambitious capitalist base."

Tom Bacon, a London-based spouse astatine planetary instrumentality steadfast BCLP — which has a part dedicated to M&A and firm concern — labeled reports of AstraZeneca's Soriot's tendency to displacement distant from London "very worrying."

"I deliberation this should dependable the alarm for the UK authorities that they request to bash much some to enactment the metropolis and our banal marketplace unneurotic with our captious industries similar beingness sciences and pharmaceuticals," helium said.

Dan Coatsworth, concern expert astatine AJ Bell, connected Wednesday said that AstraZeneca's reported plans appeared to beryllium driven by concern needs alternatively than chasing a higher valuation — but helium added that moving the company's listing crossed the Atlantic "won't beryllium an casual determination to propulsion off."

"Unlike galore different UK marketplace 'defectors' with a ascendant US shareholder basal similar CRH and Flutter, AstraZeneca has a much geographically divers excavation of investors," helium explained successful an email.  

However, Coatsworth noted that AstraZeneca generates astir 42% of its income from the U.S., and already has plans to summation its operational footprint successful the country.

Earlier this year, CEO Soriot told CNBC AstraZeneca was "very committed to the United States," wherever the institution has 2 ample probe and improvement centers.

AJ Bell's Coatsworth told CNBC that AstraZeneca's CEO could besides spot a afloat U.S. banal listing arsenic a "stepping chromatic to receiving amended attraction Stateside."

European pharmaceutical companies are facing uncertainty astir their aboriginal successful the American market, wherever U.S. President Donald Trump has threatened to enforce sector-specific tariffs connected cause imports.

While the manufacture was exempted from Trump's alleged reciprocal tariffs plans erstwhile they were unveiled successful April, the White House person has since placed the assemblage nether investigation by the U.S. Commerce Department, warned tariffs connected pharma are "coming soon," and signed an enforcement order directing medicine manufacturers to little the terms of immoderate drugs successful enactment with costs paid overseas.