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Dec 28, 2022

European and Asian small caps record fall in domestic investor base

But North American investors gain influence in home region

European ownership of domestic small-cap firms dropped sharply by 25 percentage points in 2022, with 63 percent of shareholders coming from the region compared with 88 percent in 2021.

In Asia, domestic ownership of small caps also dropped by 14 percentage points year on year, from 92 percent in 2021 to 78 percent this year. 

This is according to the IR Magazine Global Investor Relations Practice Report 2022, which surveyed more than 450 IR practitioners. The report provides data on and insights into IR practice across a wide range of areas such as IR budgets, team sizes, external spending and shareholder base composition. 

Research on shareholder bases reveals that unlike in Europe and Asia, small businesses in North America experienced a marginal increase in domestic ownership, with 88 percent of investors coming from the region this year, up 3 percentage points from 2021.

As well as reporting growth in domestic small-cap shareholdings, North American companies recorded regional shareholder base increases across all market caps, though mostly marginal. 

The report points out that in the US the regional shareholder split is overall ‘broadly consistent’, but larger companies have a slightly lower domestic shareholder base than small and mid-cap businesses. 

European fall back 

Beyond the decrease in domestic ownership at the small-cap level, the overall proportion of shares in European companies held domestically also dropped by 9 percentage points this year to 57 percent. 

European and Asian small caps record fall in domestic investor base

These year-on-year changes make Europe the region with the lowest level of shares held domestically, with a growing number of shares being held by North American investors, especially at large and mega-cap firms. One in 10 shares is also held by investors outside the three regions studied.

In Asia, there is a significant difference between investor bases at small and mega-cap companies: while Asian small caps recorded a drop in the percentage of shares held domestically in 2022, it is still among small caps that regional investors hold the highest number of shares. 

This is in contrast to Asian mega-caps, where just 42 percent of shareholders come from the region, while three in 10 shares are held by North American investors and 23 percent by Europeans. 

The full IR Magazine Global Investor Relations Practice Report is available to advanced subscribers of IR Magazine, while a global overview of the report is available to essential subscribers.

Click to read Global Investor Relations Practice Report Sample 2022