Also populist, they seek to bash bankers where they can whilst running an macro economic policy which is designed to save the banks at the expense of all else (Labour did this too, it seems no one has the courage even in power to challenge the economic consensus).
Well, there is one area which really needs sorting out and this is the private placings market. This year may be the busiest ever for private placingss. What they are is a company issuing new shares to private investors at a discount to the current price. The private piece means that current retail investors don't get a look in. In fact what you find is that current investors watch the share price fall for no reason, then a placing is done at a discount to the new lower price, the share normally then hovers around the issue price for a few weeks before some good news (who knew that was coming, eh? ) is released. See the chart for IAE - one of my favourite shares for an ISA - for a classic example. I have not marked the private placing point, can you guess? Retail investors get thoroughly roughed over in favour of wealthy individuals and institutions.
What is so wrong with this is that there is a mechanism for open offers in which all investors can participate, but these are said to be too expensive for smaller companies. This makes no sense, if these are too expensive then so are IPO's and yet these companies are listed.
There are many ways to fund companies and as Capitalists we are not in favour of banning things here in general. What is need is a rule to ensure that say only 10% of share capital can be issued in a private placement, after that it has to be an open offer. This would stop insiders in the City abusing the situation. Also companies need stronger guidance about discussing publicly their funding needs, up to a year in advance, so that shareholders know if a big dilution is coming - then they can decide whether to hold or participate.
The City needs to realise too the importance of allowing retail investors some success in the markets, as at the moment volumes and liquidity are low. People are getting wise to the impossible challenge of playing a house game so stacked against them. Hedge Funds and High Frequency trading are topics I will come back too soon.
The Government should realise that a bit of transparency and fairness will do the City of London's international reputation the power of good.