Private investors put faith in UK plc

Retail investment highest since financial crisis

The value of UK equities held by private investors reached £237 bn at the end of May 2011, according to the latest study by Capita Registrars.

Hitting its highest point since late 2007, the £237 bn figure equates to 11.7 percent of the UK equity market. This is a bounce back from the all time low of 10.9 percent a year ago, albeit a fraction down on the 11.8 percent figure for February 2011 previously reported by Capita.

The £798 mn of new money invested in the period between March and May 2011 comes as further confirmation that private investors are continuing to put more of their money into UK shares. It follows on from the £473 mn invested in the first quarter of this year and £977 mn during the second half of 2010, bringing the total net investment by private investors to £2.25 bn over the 12-month period.

‘Equity ownership is not dying out,’ said Charles Cryer, chief executive of Capita Registrars. ‘Private investors have recognised that equities offer protection against inflation, the prospect of growth and a superior income to many other assets.’

Cryer made similar comments in March when he said private investors were being tempted back to the UK equity market by strong dividend yields and the recovery in corporate profits, against a backdrop of paltry interest rates, low bond yields and a shaky property market.  

The sustained retail investor appetite in London should make interesting reading for companies like Prada, the European luxury goods brand, whose high-profile IPO in Hong Kong last week attracted underwhelming demand from local retail investors.

‘With such sustained buying from private investors, corporate advisors may be encouraged to progress with sensibly priced IPOs that tap into this strong retail demand,’ noted Cryer.

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