With the problems facing foreign mining giants Vedanta, Glencore and African Barrick Gold, is the multicultural flavour of the FTSE100 beneficial for the UK economy?
Multiculturalism is – to put it mildly – controversial. Some say multiculturalism it is a vile conspiracy (from the EU?); others suggest it is a happy, unplanned event that benefits us all.
It’s much the same with stock market multiculturalism. The London Stock Exchange is the most diverse in the world – its main FTSE100 index is the only national measure of share market value to be packed with companies with little connection to the UK other than place of registration and stock market allegiance.
While the Dow is for US companies, the CAC40 for the French, and the DAX for Germany, the FTSE 100 is a veritable rainbow, embracing everything from South African breweries to Indian bauxite via Mexican silver and Kazakhstan copper. Some 15 mining companies are listed, by far the biggest sector group of non-UK companies – none has any significant economic activity in the UK.
Whether this multiculturalism works for investors can be, as with any other stock market debate, a matter of timing. Over the past year, they have depressed the FTSE 100 – the mining sector is down by some 15 per cent while the index itself is up nearly 13 per cent. Swiss commodities giant Glencore has seen its share price suffer as its takeover of Xstrata rumbles on. …
Vedanta may soon fall out of the FTSE 100. But whether it survives in the FTSE100 or not, Vedanta is not the only multi-cultural miner under fire in London. A report earlier this year from the London Mining Network suggested that “if you run a mining company and want to get away with fraud, pollution, complicity in torture and even murder, then a listing on the London Stock Exchange (or the Alternative Investment Market for smaller companies) is for you.” The network want tighter monitoring of mining companies to be included within the powers of the new Financial Conduct Authority which takes over from the Financial Services Authority early next year.
In a report issued in March, UK-listed Mining Companies and the Case for Stricter Oversight, the Network highlighted miners with “outstandingly bad records of poor governance, environmental destruction, illegality and complicity with human rights and workers’ rights abuses.”