UK to review stock market's "quick buck mentality"

LONDON: Britain will try to encourage equity investors to take a longer term view of their shareholdings and break away from a "quick buck mentality", Business Secretary Vince Cable said on Wednesday, June 22.

He said equity investment needed to be "recalibrated" to support the long-term interest of companies and underlying beneficiaries such as pension fund members, according to extracts of a speech to the Association of British Insurers in London released in advance.

Economic commentator John Kay would lead a review into investment in Britain's stock markets and examine the role of pension funds, pension advisers and fund managers, Cable said.

The review, which will report its findings in 2012, will examine "how best to ensure that the time scales over which companies and fund managers operate match the interest of clients and beneficiaries", a briefing paper released by Cable's department said.

It follows an examination of corporate governance launched by Cable last October in response to the controversial 2010 takeover of British confectioner Cadbury by U.S. rival Kraft Foods .

"The growing demand for early returns has serious implications for investment in longer-term projects, such as improvements to infrastructure networks or the development of new technologies, which by their very nature only produce a return over a period of many years," Cable said.

"Such projects may not fit with the quick-buck mentality that appears to be gaining in popularity, but they are essential in facilitating the UK's long-term growth. So, too, is a rational focus on long-term value rather than short-term profits."

Britain's Takeover Panel is also considering tougher merger rules in the wake of the $18 billion Cadbury deal, which critics said was driven by investors seeking a quick return and was not in the long-term interests of Britain's economy. - Reuters