LONDON (CU)_Back in 2019, foreign investors owned 64 per cent of UK-listed shares, as studies demonstrated a steep decline in British shareholders’ domestic holdings. As Americans, Europeans and even Canadians continue to increase their holdings in firms quoted on the London Stock Exchange, this figure has expanded even further, to 66 per cent, investor relations expert Orient Capital said.
According to the consultancy firm, only 2 per cent of the London stock market is owned by British pension funds, which was a drop by three-quarters from 8 per cent back in 2013.
Among these foreign investors, those from the US were the biggest holders, as US mutual funds in particular own more British shares than UK unit trusts. “Along with their Canadian neighbours, US mutual funds now own £1 in every £6 of UK shares, up from just £1 in £9 in 2013, making them the largest shareholders in British companies, bigger even than British unit trusts which now own £1 in every £7,” Orient Capital said in its report.
Moreover, investors from the European region has also increased their holdings of UK-listed shares over the past two years, as their stake in British companies, which was at a post-referendum low of 15 per cent, two years ago, rose to 19 per cent this year.
“The UK stock market, in common with leading stock markets around the world, is dominated by big multinationals whose operations span every continent and compete with global peers, wherever they happen to be listed,” Orient Capital’s global chief executive Alison Owers said. “There is therefore no logic for investors only to consider companies that happen to be listed at home.”
Meanwhile, experts point out that although there has been a steep decline in British pension funds’ share ownership in domestic businesses, however, they continue to invest in UK firms in other means, particularly by investing in their infrastructure funds and purchasing their bonds.
Moreover, just as foreign investors continue to dominate holdings in UK companies, British investors have also begun to diversify their investments internationally, with more funds flowing into global unit trusts than UK-focused funds. “As UK investors have looked further afield to find the best opportunities and to maximise the benefits of diversification, so foreign investors have come to our shores,” Owers said.
