Delistings worry for managers - FT.com Delistings from exchanges in Greece, Ireland and other peripheral eurozone states could deter fund managers from buying into companies in those countries, equity investors have warned. FTfm has learnt that at least four companies from Greece, Spain, Portugal and Ireland have engaged lawyers with a view to moving their primary listings to London. That comes after Coca-Cola Hellenic Bottling Company, Greece's largest company by market capitalisation, announced plans to leave the Athens exchange, mimicking a number of high-profile defections from the Irish stock exchange to London over the past year. IN Investment Strategy Fund managers say delistings may eat into trading volumes when peripheral eurozone exchanges, and the companies listed on them, are being buffeted by a lack of confidence in their domestic economies. "The impact on liquidity is a concern," said Paul Squires, head of trading at Axa Investment Managers. As liquidity dries up it becomes more expensive to build or exit positions and that can influence investment decisions. Funds with eurozone-only mandates may be forced to sell their holdings in companies that adopt primary listings in London. On the other hand companies that switch to London would become eligible investments for funds with UK mandates. Shares in CRH, a Dublin-based building materials company, rose 4 per cent the day it moved its primary listing to London, as traders anticipated buying by FTSE index-tracking funds. An LSE listing may also make it easier to issue more shares. "London is well regarded with a deep pool of investors and fund managers, which makes it easier to raise capital," said Mark Austin, a partner at Freshfields Bruckhaus Deringer, who has had inquiries from several companies about moving listings to London. But for exchanges in the eurozone's periphery, losing out to London threatens to start a vicious cycle. "For exchanges like Dublin's, losing companies is a big deal," said a London-based small-cap fund manager. It reduces liquidity and there is knock-on effect for brokers in terms of redundancies. That means less research so trading is of lower quality. Ailish Byrne, at the Irish stock exchange, said trading volumes were not always adversely affected. Turnover of CRH shares in Dublin, where it has maintained a secondary listing, has increased since it moved its primary listing to London. But some companies, such as the Irish healthcare provider United Drug, have dropped out of their domestic exchanges altogether in favour of London listings. Luís Laginha, chief executive of NYSE Euronext Lisbon, said where Portuguese companies are considering listing abroad, they would maintain a primary listing in Lisbon. He also said investors had raised concerns about liquidity on the exchange during the eurozone crisis: "Liquidity is a concern for everyone connected to the market, and I can't deny this has come up, but this is not something you hear fund managers only talking about in the context of the the Portuguese market," he said. The loss of primary listings also threatens the standing of peripheral eurozone states in global equity indices, which are a key source of trading volume and investor interest. Coca-Cola Hellenic is one of just two companies in the MSCI Greek index, and MSCI will have to add a small company to the index to ensure it can still be calculated. MSCI warned in June it may demote Greece to "emerging" market status next year. Nikos Porfyris, deputy chief operating officer of the Helex Group that runs the Athens exchange, said foreign investors continue to be responsible for more than 50 per cent of trading and that Coca-Cola Hellenic is expected to maintain a secondary listing in Athens. The process of transferring a listing to London can be completed in less than two months according to lawyers, thanks to a clause in the European Union prospectus directive that allows companies traded on an EU-regulated exchange for 18 months, and with an approved prospectus, to list on another without issuing a new prospectus. People familiar with thinking at the London Stock Exchange said officials there have discussed the potential for more eurozone companies to switch their listing to London. "The LSE is certainly not discouraging the trend," said one person close to the exchange. One London-based fund manager said: "It's politically sensitive for the LSE to poach companies, but from my perspective, the more companies listed in London, the more choice of investments I have." The LSE declined to comment.