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London back in the spotlight for US investors

stocks and shares
By Molly Gretton
21 August 2025
Financial & Professional Services
Strategy & Corporate Communications
News

For too long, London has been viewed as underappreciated and undervalued. Now, it seems American investors are starting to take a second look. Since the start of 2025, more than $15 billion has flowed from the US into UK equities - more than into any other foreign market. The result has been record trading highs for both the FTSE 100 and the All-Share index, and a renewed sense of momentum in a market that has long been overshadowed by other global financial hubs. 

The reasons for this renewed interest are clear. UK stocks are looking relatively attractive compared with US markets, particularly in dividend-paying, defensive sectors such as utilities, financials, and defence. Exchange-traded funds tied to UK indices are seeing fresh inflows, and major institutional investors like Legal & General and Aviva are highlighting the UK’s robust regulatory and legal frameworks as a further vote of confidence. 

But the bigger question is whether this marks a significant turning point for the UK market, or simply a short-term rally. In recent years, London has unfortunately suffered an IPO drought, a proportion of companies shifting their listings abroad, and a perception problem that has kept domestic investors hesitant to invest. Against that backdrop, this resurgence of interest is as surprising as it is very welcome. 

What makes this moment important is that it’s more than just a cash boost. It’s a reminder that the UK still matters on the global stage. However, at the same time, it highlights a small contradiction. While international investors are buying in, domestic investment remains low. Without stronger participation from pension funds, asset managers, and retail investors, this rally could be fragile. 

To keep the momentum going, the UK needs more than just overseas investment. Market reforms that make London a more compelling listing venue, alongside incentives to encourage long-term domestic investment, are essential.  

This surge in US investment is certainly encouraging and is a step on the journey towards reviving the London Stock Exchange. If the UK can seize this moment by modernising its market infrastructure, improving access to capital for growth companies, and rebuilding domestic investment, it could signal the start of a genuine recovery. Otherwise, this opportunity could slip away.