One of the maxims of investment is that, “Capital is scared”.
It seems that capital is currently scared of being in the United Kingdom. The following story from The Independent
suggests that money is leaving the UK at an incredible rate. If you watch currency markets, this is not a surprise.
This could all simply be related to the state of the British economy and the deepening of the recession.
But, the New Labour government has not exactly been shareholder friendly or respectful of the LSE of late. The merger of Lloyds TSB and HBOS was hurried through outside of normal procedures and seems to have broken Lloyds Bank. Not good.
Whilst it appears to be possible to ‘pull the wool’ over the eyes of the UK electorate, currency and stock traders, often are harder to fool. It seems once again that the markets have pegged the government as doing a poor job and are withdrawing their money quickly.
Thus, it appears that the UK is considered to be very high-risk in terms of investment right now. The “hot money” is moving. “Capital flight” is very real right now…