Skyfall for London: why capital is leaving the world's financial center
South Korea has overtaken the UK in terms of stock market capitalization. Photo: Anjana Menon / Unsplash.com
In the UK, the traditional parties - the Conservatives and Labor - lost the local elections for the first time. And the country's stock market lost to South Korea. TMT Investment co-founder German Kaplun analyzes why Britain starts and loses.
The size of the economy doesn't matter
South Korea has overtaken the UK in terms of stock market capitalization. This is reported by Bloomberg.
Back in late 2024, the UK market was almost twice the size of the Korean market. Now Korea is ahead. In a year and a half, South Korea's capitalization has roughly doubled, while the British one was practically standing still.
That said, Britain is still larger in population (69 million vs. 52 million), has more than twice the nominal GDP, and is considered one of the world's leading financial centers.
How did this even become possible?
This is the story of a simultaneously overlooked AI boom and Labour's failed economic policies. After Starmer came to power, Britain got a classic "anti-business" set:
Taxes were raised to the highest level since the post-war 1940s.
Taxes and pressure on rich Brits and wealthy expats - non-doms - have been drastically tightened.
A real outflow of capital and companies has begun.
As a result, London is rapidly losing IPOs, listings and public companies. International capital is leaving for Dubai, Singapore and Switzerland, while tech growth businesses are choosing the US en masse. What had been accumulating for years (Brexit, weak tech sector, low multiples) has turned into a systemic and, it seems, irreversible decline under Labor.
Amidst this self-destruction, South Korea caught two powerful growth engines at once.
Global AI boom.
Reforms to eliminate the "Korean discount" (improved corporate governance, minority shareholder protection, buybacks).
The result: over 2025, Samsung is up about 125% and SK Hynix is up 274%. Together they form about 40% of the KOSPI's total capitalization. The Korean market has almost tripled since the start of 2025, while the FTSE 100 has added a measly few percent.
The key conclusion is that stock market capitalization is not about the size of GDP and population. It is about how attractive a country is to capital, entrepreneurs and public companies.
Korea is now benefiting from both reforms and a new technology cycle.
Britain, on the other hand, under Labor's leadership, is actively engaged in the suicide of one of the world's most important financial centers
This article was AI-translated and verified by a human editor
