Former Bank of England Governor Meryvn King today urged the Financial Conduct Authority to keep London’s equity markets open amid calls to close them as panic selling spreads.
The FTSE 100 tumbled another 4%, or 217.32 points at 4973.46, but King believes closing the markets would only cause more damage.
King told BBC Radio 4: “I don’t think there is any obvious reason for suspending trading. That might well create even greater uncertainty as to what the values of assets and exchange rates will turn out to be further down the road.”
The comments come as the FCA told companies over the weekend to delay preliminary financial statements due to the stress caused by the coronavirus outbreak.
The FCA believes the statements are adding to the panic and led to speculation the authority might close the markets altogether.
But Minerva analyst Kathleen Brooks agreed with King and said shutting the markets would suck liquidity from the UK financial system and not let investors who need cash sell their positions.
She said: “I understand the FCA does not want to see falls of 15%-plus. But it would be a risky strategy as once you tell companies not to file how do you get them to again once things are back to normal.”
The discussion raged as panic spread across global markets after worries overnight that the US might not be able to get its $4 trillion support package through Congress.
London listed companies with a large presence in the US were sold off, including plumbing equipment seller Ferguson which dropped 493p to 4163p.
But there were some highlights for investors, including private hospital operator Spire Healthcare which became the latest FTSE company to join the fight against coronavirus as the battle rages on all fronts to contain the disease.
Spire has signed an agreement with the NHS to make all of its 35 hospitals in England available to the NHS for a minimum of 14 weeks.
The move comes as NHS chief executive Simon Stevens scrambles to block buy beds amid an expected spike in coronavirus cases over the coming weeks.
Spire said beds, operating theatres and recovery facilities would be repurposed to provide respiratory support for Covid-19 patients.
The NHS will pay Spire weekly in advance to cover the private healthcare company’s costs. Spire shares were up 11p at 65p.
Pizza delivery company Domino’s also rose as it is expected to see a short-term boost from people staying at home and being stuck in their houses.
Analysts at Berenberg added that the company would also be boosted by the Government’s business rates holiday. Shares were up 1.2p at 271p.